Student Debt Crushes Homebuying Dreams For Millennials , Now Delayed 8 Years

The student debt crisis is rapidly expanding, hitting a new record high of $1.6 trillion in 2019 and surpassing auto loans and credit card debt post-GFC.

About 44 million Americans, or 20% of adults, have insurmountable student debts. About 11% of them are in student loan default, and by 2023, as many as 40% could be underwater.

The life-altering impacts of student loan debt on millions of millennials is debilitating towards their financial health.

Many are drowning in student debt, working in the gig-economy with two jobs and can hardly afford rising rents and necessary food items.

At least 60% of millennials have no savings, and their poor financial health has contributed to the reason why so many young adults can’t afford a downpayment on their first home.

A new study published by the Urban Institute says the current homeownership rate of young adults is 37%. That’s 8% lower than the homeownership rate Generation X and baby boomers had at the same age.

“If the homeownership rate for millennials had stayed the same as previous generations,” the study noted, “there would be about 3.4 million more homeowners today.”

The study determined that 36% more graduates who had eliminated their debt (or never had any) owned a home and graduates who paid off their debt were 7x more likely to purchase a home.

About 40% of millennials have student debt, according to the AARP, and Clever Real Estate says the student debt has delayed home buying by eight years for millennials.

The Federal Reserve has said that “a $1,000 increase in student loan debt lowers the homeownership rate by about 1.5 percentage points for public 4-year college-goers during their mid-20s, equivalent to an average delay of 2.5 months in attaining homeownership.” So that means with the average student about $37,0000 in debt, that’s a 7.7-year delay in homebuying.

In 2012, about 71% of all millennials graduating from college had a student loan. The average debt load has quickly increased over time, moving to $37,000 from nearly $9,500 in the early 1990s. Today’s levels are 3x higher than 2006 levels.

And it’s not just home buying that has been delayed, many of these millennials have avoided weddings and starting a family because their debts have limited their economic mobility.

According to Douglas McIntyre with 24/7 Wall Street, who examined student loan data from LendEDU, the Deep South struggles with high amounts of credit card debt; student loan debt is heavily concentrated in the Northeast.

History will show millennials will be known as the “lost generation,” as their ability to participate in the American dream of homebuying was cut short by student debt servicing payments. And with the next recession lurking around the corner, millennials could soon find themselves without a job and back in their parents’ basements.

via ZeroHedge News https://ift.tt/2YZ5KR2 Tyler Durden

Mexicans Are Safer In El Paso Than In Mexico

Authored by Ryan McMaken via The Mises Institute,

The Mexican government, which has contributed heavily to Mexico having one of the world’s worst homicide rates, has announced it may seek legal action against the United States “for failing to protect its citizens after this weekend’s mass shooting in the border city of El Paso.”

In a statement yesterday, Foreign Minister Marcelo Ebrard stated

The president has instructed me to ensure that Mexico’s indignation translates into … efficient, prompt, expeditious and forceful legal actions for Mexico to take a role and demand that conditions are established that protect … Mexicans in the United States.

Yet, it’s hard to believe that Mexican politicians are truly indignant about the deaths of Mexican nationals in the US when Mexico’s homicide rate is nearly five times that of the US, and among the worst in the world. Moreover, Mexico’s homicide rate in 2017 rose to the highest level ever recorded, climbing to 24.8 per 100,000 . Preliminary data suggests 2018 may be even worse .

More than 30,000 homicide investigations were opened in Mexico in 2017. In the US, which has 200 million more residents than Mexico, homicides total around 17,000.

These fact, however, have not stopped the Mexican state from displaying a total lack of self-awareness when it comes to crime and safety.

The foreign minister also implied the US was at fault due to faulty gun laws:

Ebrard said Mexico would request information from the U.S. about how the weapon used in the attack was acquired by the shooter.

“We consider the issue of arms to be crucial,” he added.

As with homicides overall, it’s hard to believe that Mexican politicians are sincere when expressing indignation about the manner in which Americans acquire firearms.

Gun control is stringent in Mexico, which means illegal gun ownership is widespread, and law-abiding citizens are lopsidedly outgunned by drug cartel members and ordinary street thugs.

The Mexican government — and gun control advocates in the US — have attempted to distract from these facts by claiming the US is somehow responsible for the presence of illegal guns in Mexico, but the evidence hasn’t backed this up.

Trying to Blame Mexican Violence on US Guns

The often-quoted statistic allegedly showing that as much as 70 percent, or even 90 percent, of guns seized in Mexico come from the US is not true. That statistic is based only on seized guns that are also traced by the ATF . How many of all guns seized in Mexico come from the US? According to Stratfor, ” almost 90 percent of the guns seized in Mexico in 2008 were not traced back to the United States .” Nor does the Mexican government ask the ATF to trace all guns seized in Mexico. This is because many of those arms can be traced back to the Mexican government itself.

After all, it’s not as if Latin America has no locally produced firearms. The 2012 Small Arms Survey notes:

Latin America has a long tradition of gun production, with some manufacturers tracing their history back many decades. Brazil has the largest arms industry in the region, followed by Argentina. Firearms are also produced by private or government-owned industries in Bolivia, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Venezuela. While most of the production is intended to equip the military and law enforcement institutions, some of the production is for private use.”

The report also refers to “major exporters” of small arms in Argentina, Chile, Mexico, and Brazil. So we know Mexico contains local arms-producing manufacturers to the point that some are “major exporters” who also produce arms for government institutions. And government stockpiles are a source for black markets as well.

Even worse, the same government institutions that work to keep firearms out of the hands of peaceful private citizens, are often in league with the cartels. As a recent New York Times article noted about local resistance in Michoacan to cartel-sown chaos, “Townspeople formed militias to eject both the cartel … and the local police, who were seen as complicit.”

In other words, there is often no clear line between law enforcement and the cartels themselves.

Often, official law enforcement simply can’t be bothered . Things are even worse when, as one cartel member put it, “soldiers and cops are … really on our side.”

Thus, it shouldn’t exactly be a surprise that many of the guns seized in Mexico are coming from official government sources.

Of course, even if it were true that Mexican criminals were getting their guns from the US, how is it that crime wave only goes one way? If guns are the reason for high crime in Mexico — where guns are hard to legally acquire — shouldn’t crime rates be far higher in the US where guns are far easier to get?

It can’t be that Mexico has implemented a drug war. The US wages a drug war too.

Nor can we even fall back on some theory about Mexican race or culture. Many US border towns, which are heavily Mexican-American in origin are some of the safest places in the US.  El Paso, for instance, which is more than 80 percent Hispanic, has long been one of the safest cities of its size in America. Homicide is so rare in El Paso, in fact, with only 20 homicides in 2017, that the El Paso shooter doubled the homicide rate in that city all by himself.

Mexican-Style Reforms: More Gun Control and More Centralization of Power

Thus, when Mexican politicians hint that the US is not sufficiently protecting Mexican nationals, it’s hard to imagine which Mexican officials think would be the proper course of action. Should US governments adopt Mexico-style legislation?

Given the complete failure of Mexico’s gun-control regime, one would hope not.

Moreover, centralization of government power in Mexico has helped ensure local and state governments in Mexico are unable to address problems on their own.

Although the Mexican political system is technically a federal system, the reality is far different, since the central government tightly controls the overwhelming majority of tax revenues.

Indeed, the federal government has maintained the lion’s share of control of government funding. As The Economist noted in 2003, most government revenue, including all levels of government, flows to the federal level alone:

Power may be dispersed, but money is not. About 80% of federal revenues are appropriated by the centre; most of the rest falls to the states, though 5% is spent by the municipalities. In Brazil, by contrast, the federal government controls only around half of total government revenues.

Under Mexico’s law of “fiscal co-ordination”, the states’ powers to raise local revenues are restricted. They consist chiefly of fairly small taxes on payrolls and on cars; municipalities must rely on symbolic property taxes. At one extreme, the Federal District, the quasi-state which includes much of Mexico City, raises about 45% of its $8 billion budget itself. Most states are at the other extreme—lucky if they gather 10% of their spending.

For the other 90%, they must rely on federal transfers, divided up under a notoriously complicated formula dating from 1980.

The situation had not changed markedly by 2018 with Robert Velasco-Alvarez noting :

According to Moody’s , the average Mexican state collects only 10 percent of its income. The other 90 percent of the states’ budgets comes in the form of federal government transfers. A former head of our secretary of the Treasury’s Unit for Coordination with the States claims that municipalities account for only 1.1 percent of Mexico’s tax revenues.

By contrast, in the United States, state and local tax collection — while certainly less than that of federal receipts — amounts to over forty percent the size of federal revenues. In numerous states, state revenues alone— not counting local revenues — reach thirty percent the size of federal revenues. When we look at federal aid to states as a percentage of state revenues, we find that rarely does federal spending amount to more than 35 percent of state revenues.

In other words, states in Mexico are considerably more reliant on federal spending than is the case in the US. This means more central planning and more nationwide corruption. It’s perhaps no surprise that after 20 years of top-down “solutions” to the crime problem in Mexico, homicide rates are higher than ever. 

So one could imagine the Mexican politician’s version of reform: implement gun control, and centralize political power.

We can see the result of this system at work in Mexico right now.

I don’t say any of this, of course, to try and make governments in the US look blameless or competent. American politicians are certainly not strangers to gun control or corruption, especially in places like Baltimore where homicide is rampant.

Moreover, the US has long made the drug war worse in Mexico by pressuring the Mexican government to abandon efforts to de-criminalize or legalize some recreational drugs. It has long been the policy of the US to use Latin American communities as the battlegrounds in the US’s drug war. With disastrous results for the Latin Americans.

But Mexico’s current posturing and grandstanding over the murders of Mexican nationals in El Paso would be comical if the shooting weren’t so tragic. Listening to Mexican officials berate a foreign government about homicides is like listening to the US government lecture other governments about the need to respect the sovereignty of foreign states. It’s just politicians talking and ought to be ignored.

via ZeroHedge News https://ift.tt/2MOr59v Tyler Durden

HarmonyOS: Huawei Unveils Open-Source Android Alternative

As expected, Huawei has launched its new operating system (OS) as a potential alternative to Google’s Android OS, according to Android Authority

News of the new operating system also comes in the wake of a U.S. trade ban against the company back in May. President Donald Trump has since claimed that the ban will be partially lifted, but the U.S. Commerce Department is still banning the company.

The U.S. ban complicates Huawei’s ability to offer Android on its phones, so HarmonyOS is seen as a plan B if the trade ban affects Google’s ability to support Huawei in the future. In fact, rumors suggest that the Chinese brand is working on a Harmony OS phone for release later this year. –Android Authority

Speaking on the first day of its annual developer conference on Friday, CEO Richard Yu announced that HarmonyOS is “the first microkernel-based distributed OS for all scenarios” which will eventually support a range of apps – with focus on HTML5, Linux and Android apps, which will ” all be able to run on our OS in the future” according to Yu. 

The new platform supports smartphones, smart speakers, computers, smartwatches, wireless earbuds, cars, and tablets. In fact, Yu says the platform supports RAM sizes ranging from kilobytes to gigabytes. Interestingly enough, Huawei says HarmonyOS won’t support root access. –Android Authority

HarmonyOS 1.0 will be first adopted in its smart screen products, which are due to launch later this year. Over the next three years, HarmonyOS will be optimized and gradually adopted across a broader range of smart devices, including wearables, Huawei Vision, and head units for your car,” the company told Android Authority in an emailed press release. 

What about Android?

While Yu said that HarmonyOS can replace Android “at any time,” he reiterated the company’s commitments to Google’s platform. 

If we cannot use Android in the future, then we can immediately switch to HarmonyOS,” said Yu, who added that migrating from Android to Harmony “is not that difficult.” 

via ZeroHedge News https://ift.tt/2KtXsZH Tyler Durden

Why Is Saudi Arabia Giving Up Land The Size Of Massachusetts For “The World’s First Independent International Zone”?

Authored by Michael Snyder via The End of The American Dream blog,

Under the leadership of Saudi Crown Prince Mohammed bin Salman, a $500 billion “mega-city” is being constructed in the northwestern corner of Saudi Arabia.  This city has been named “Neom”, and when it is fully completed it will be approximately “the size of Massachusetts”.  The Wall Street Journal was able to recently examine 2,300 pages of classified documents related to this project, and what they discovered is absolutely stunning. 

This “city of the future” will feature an artificial moon, flying taxis and robot maids, but there will also be gene-editing in order to make humans stronger and smarter, and everyone living there will be subjected to 24 hour surveillance.  In addition, we are being told that this will be “the world’s first independent international zone”, and many are concerned about what exactly that is going to mean.

“Neom” certainly has a futuristic ring to it, and according to Digital Trends it was derived by combining a Greek word and an Arabic word…

Called Neom (a mix of the Greek word for “new” and Arabic word for “future”), the project aims to construct a $500 billion city, covering 10,000 squares miles of coastline and desert in northwest Saudi Arabia. With its mixture of high-tech amenities and luxury services like restaurants and shops, the goal is to build what the Wall Street Journal describes as a superior to “Silicon Valley in technology, Hollywood in entertainment and the French Riviera as a place to vacation.”

It has been reported that Saudi Crown Prince Mohammed bin Salman originally came up with the idea for the city when he “pulled up a map of his country on Google Earth and saw its northwest quadrant was a blank slate.”  He ultimately decided that it would be an ideal location for “the city of the future”, and he enlisted an army of U.S. consultants to help him fulfill his dream.

But will his dream ultimately become a nightmare?  There are some extremely alarming things that I want to tell you about, but first let’s talk about some of the cool stuff that is planned for the city

The in-development Saudi Arabian city-state will have robot maids, flying taxis, and glow-in-the-dark sand, according to confidential planning documents reviewed by The Wall Street Journal. An artificial moon will light up the sky every night, and a Jurassic Park-style island will let visitors mingle with robot dinosaurs.

Sounds like a fun place to live, right?

And even though the climate of the region is extremely, extremely dry, Saudi Crown Prince Mohammed bin Salman plans to use “cloud seeding” to produce rain whenever it is needed.

In other words, the fact that they will be using geoengineering to control the weather in this city is not even being hidden.

There will also be gene-editing facilities that will be used to make humans stronger and smarter than ever before, and according to the Wall Street Journal, Neom’s board plans to make it a fully automated city “where we can watch everything”

“This should be an automated city where we can watch everything,” Neom’s founding board is quoted as saying in the documents, according to the WSJ. “[A city] where a computer can notify crimes without having to report them or where all citizens can be tracked.”

That means while you’re chilling on the glowing beach, daydreaming about your next prix fixe meal, a drone equipped with facial-recognition technology will likely be transmitting your location to Neom’s “1984”-esque law enforcement officials.

Hmmm – that actually doesn’t sound like such a fun place to live after all.

In fact, it basically sounds like the sort of dystopian nightmare that I have always been warning about.

But even more alarming is the fact that this city is being billed as “the world’s first independent international zone”

The city itself will be “the world’s first independent international zone,” presents its marketing literature. How independent it will actually be remains to be seen. The Kingdom of Saudi Arabia set up a “special authority,” chaired by the Crown Prince himself, to supervise the development of the project. Once its built, the zone will be managed via a “regulatory framework that will adopt world-class investment laws to support residents and targeted economic sectors,” declares its presentation, which also purports the city-state will have an “autonomous judicial system.” Its laws, enforced by city-wide automation and tracking of its citizens, would be independent of Saudi Arabia’s, created by a slate of both local and foreign investors “in accordance with international best practice.”

So this city will not technically be part of Saudi Arabia.

It will actually be a “city-state” with its own laws, rules, regulations and judicial system.

Could it be possible that this giant “independent international zone” will one day be the home base for an “international leader”?

I don’t know.  I am just throwing that out there.

Obviously there is an agenda here.  Why else would Saudi Arabia be willing to give up a giant tract of land the size of Massachusetts for a futuristic mega-city that won’t even be under their jurisdiction?

As is the case with so many other things, this isn’t being hidden from us at all.  It is being done right out in the open, and Saudi Crown Prince Mohammed bin Salman is being quite clear that his intention is to make Neom the most important city on the entire planet.

But to me it sounds like a prison, and the truth is that this is the direction the entire globe is heading.

Already, virtually everything that we do is being watched, monitored or tracked somehow.  With each passing year, the global Big Brother surveillance grid becomes even more extensive, and we have very little privacy left.

So perhaps we should stop talking so much about the dystopian nightmare that is coming, because to a very large degree it is already here.

via ZeroHedge News https://ift.tt/2ZMHajG Tyler Durden

Amazon Plant In China Accused Of Forcing High School Interns To Work 60 Hour Weeks

In addition to not paying taxes and putting the entire brick and mortar retail industry out of business single-handedly, Amazon has now opened itself up to even more criticism. The company is being accused of using a Chinese assembly plant that relies on temporary workers, including high school interns, and overtime limits set beyond law, according to Bloomberg.  

In fact, Foxconn fired two executives from the plant, which assembles Echo speakers and Kindle e-readers, in response to a labor group’s allegation that it cut wages and broke labor laws. This marks the second time that Amazon and its Taiwanese peer have been under scrutiny for the treatment of workers at the Hengyang plant. 

The plant’s chief and head of human resources were fired, while managers at the plant who were responsible for using interns were “punished”, according to Foxconn. 

China Labor Watch said:

 “Amazon and Foxconn responded that they would make improvements to the factory’s working conditions. However, CLW’s 2019 investigation found that Foxconn’s working conditions did not improve, and instead deteriorated.”

The labor group deemed the factory’s wages too low to support a “decent standard of living last year”. Since then, they’ve been slashed another 16% in 2019. 

The poor salary hasn’t been enough to fill the company’s 58 assembly lines, which require 7,000 people to operate during peak production, which begins in July. To fill the void, Foxconn instead tapped interns as young as 16 from vocational schools, some of which were forced to work overtime. 

One 17 year old computing major at a vocational school, who was responsible for putting protective film over Amazon Echo Dots, said she worked 40 hour work weeks. She was then asked to start working overtime and put in 60 hour work weeks. When she complained to the manager, she reportedly was warned by her teacher that turning down the work could jeopardize her graduation. 

Foxconn admits that its proportion of contract workers and student interns had “on occasion exceeded legal thresholds and that some interns had been allowed to work overtime or nights”.

“We were not in full compliance with all relevant laws and regulation,” Foxconn said. The company continued, in a statement:

“Effective immediately, the percentage of interns assigned to that facility will be brought into full compliance with the relevant labor law.”

The specific allegations made by the China Labor Watch report included:

  • Interns from local vocational schools accounted for more than 20% of the plant’s current workforce, double the levels permitted by law

  • Such student workers were forced to work night shifts and overtime, in violation of the law, and that some interns were physically and verbally abused by teachers overseeing their work

  • The factory used “dispatch workers” — similar to temporary staff in the U.S. — for around one in three positions at the plant, in excess of the 10% permitted by law

  • Some 375 workers had been asked to work overtime on Sunday without receiving makeup days off, contrary to labor rules that stipulate at least one scheduled day off per week

Foxconn has battled criticism of how it has treated its workers for over a decade now. Those critiques came to a head in 2010 when a rash of suicides by workers at the company forced it to make a major overhaul of how it treated workers. 

A report from China Labor Watch last year once again shone a spotlight on the company, as well as on Amazon. Amazon claims that it asked Foxconn to make changes in 2018 after a labor audit of the Hengyang facility showed similar overtime violations. Amazon’s investigators arrived on site Wednesday and the company says it has started doing “weekly audits” of the labor issue. Let’s see how long that lasts.

Amazon commented: “We are urgently investigating these allegations and addressing this issue with Foxconn at the most senior level.”

via ZeroHedge News https://ift.tt/2GZdetd Tyler Durden

One Trader’s 3 Lessons From Working At SAC Capital

Submitted by Nicholas Colas of DataTrek Research

We have 3 lessons about how to manage money and emotions in volatile markets. All come from our time at SAC, watching great traders navigate treacherous volatility during the 2000 bursting of the dot com bubble. The key takeaways: communicate, stick to a hyper-disciplined process, and make your environment work for you.

Steve Cohen’s trading desk

Earlier in the week, as S&P futures were indicating a gap-down open, I had a flashback to the bursting of the dot com bubble in 2000. The location of that memory was the parking lot in front of SAC Capital, which was then headquartered in a modest Connecticut office park. It was about 7am and I was in a small cluster of other PMs and traders, all chatting and gathering up our courage to go upstairs and start the day.

Then we saw another trader slowly circling the lot in his car with the windows down. We could hear he was talking, but to no one in particular… “It’s going to be bad…. It’s going to be really, really bad…”

That was a shock, because this was someone who usually traded like his pad was thickly coated in Teflon. He was a consistent moneymaker, day in and day out. And he was scared. This did nothing for the mood of the group, so once he finally parked we collected him and went upstairs.

Yes, Story Time this week centers on methods I have seen over the years that help investors and traders manage the mental challenges of outsized price volatility. As is our custom, we have 3 points on the topic:

Lesson #1: Talk – and listen – and talk some more.

  • In the old SAC trading room Steve sat in a row surrounded by his senior PMs – a hugely talented group of traders – and he spoke to them consistently throughout the day. Yes, sometimes during specific events like Fed decisions the room got very quiet. But more commonly, and especially when things got choppy, these senior traders were constantly feeding Steve ideas, information and perspectives. Sometimes all they got was a nod in return. Other times, it could be a 5-minute conversation. But Steve wanted to hear – and often talk – about everything.

  • As I have mentioned in prior STTs, SAC had an in house psychologist named Ari Kiev and we all met with him weekly. Yes, he wanted to talk about our feelings, but the conversation was always centered on how we literally felt when we bought and sold stocks. Confident? Anxious? What made us feel that way?

  • There is a reason early psychoanalysts called their therapy “the talking cure”. Humans are social animals. Bottom line: communication gives internalized stress a more productive outlet than self-flagellating introspection.

Lesson #2: Stay Disciplined and Tread Carefully

  • That trader with the mini-meltdown in the parking lot was highly successful because his trading discipline would put an ancient Spartan to shame.

  • He ran a market-neutral book, so his long exposure was typically within a few dollars of his shorts. Every single-stock position had a parallel position on the other side. Long GM, short Ford, for example, and dollar for dollar.

  • When anything he was trading hit his price target, he would both start to sell it down and simultaneously reduce his exposure in the offsetting trade. It didn’t matter if the other side of the trade was working or not. Off it came.

  • He got some grief for this approach because he seemed to be leaving money on the table by not taking seemingly minimal intraday market risk. But he never broke from the discipline and during whippy markets it kept him mentally stable and profitable.

Lesson #3: Make Your Process An Ally Against Stress

  • Volatile markets make the open an especially fraught time. Seeing steep losses once markets start trading can derail otherwise competent investors/traders. Instead of sticking to process, it can be all too easy to double down on losing positions and cut loose winners to reduce exposure.

  • One very senior trader had a clever hack around that. At the end of every day he would override the closing price and mark his positions lower. None of this affected the books and record of the firm – those were kept separately – so it was kosher.

  • Why would he consciously want to go home showing less of a gain or larger loss? Because it all but guaranteed that, once the pricing system refreshed the next morning at 930am, he would see a gain.

  • I know this sounds strange, but just imagine seeing a $500,000 profit at 9:31am versus a similar sized loss. It makes a big difference and lowers stress levels materially. Good decisions come easier when you are up on the day.

Summing up: these observations are meant as investment parables – stories about how individuals develop mental hacks to short-circuit the damaging behavioral effects of market volatility. And despite the fact that all come from a hedge fund experience, they apply to all forms of investing. Managing volatility is not only about what sorts of assets you own. How you shape your environment and maintain discipline matters just as much.

via ZeroHedge News https://ift.tt/2MQXCf9 Tyler Durden

NYC Businesses Struggling After $15 Minimum Wage Results In Layoffs, Understaffing

It’s been over six months since New York City implemented a mandatory $15 minimum wage, and businesses are already starting to struggle with the increased labor costs, according to Fox News

They’re cutting their staff. They’re cutting their hours. They’re shutting down,” says Queens Chamber of Commerce president, Thomas Grech – who reports seeing an uptick in small business closures over the past six to nine months. 

“It’s not just the rent.” 

Bronx Chamber of Commerce president Lisa Sorin notes that the increase has hurt small businesses the most, while Manhattan employers and their customers can afford to pay more to compensate. “It’s almost like a whirlwind of keep up or get out,” she said. 

This dynamic is reflected in a new survey reported by Gothamist, which reveals that NYC restaurants are ‘thriving’ amid the $15 minimum wage, but acknowledges “Nearly 50 percent of respondents to the Hospitality Alliance’s survey said they would have to eliminate jobs in 2019 to make do.

MIKE DRESSER / FLICKR via Gothamist

Meanwhile, National Interest notes that from the same survey, “Roughly 77 percent of NYC restaurants have slashed employee hours. Thirty-six percent said they had to layoff employees and 90 percent had to increase prices following the minimum wage hike, according to a NYC Hospitality Alliance survey taken just one month after the bill took effect.”

These small businesses are trying to find creative ways to cope with the crunch without laying anyone off. 

Susannah Koteen, owner of Lido Restaurant in Harlem, said she worries about the impact raising wages could have on her restaurant, where she employs nearly 40 people. She hasn’t had to lay off anyone, but the increase has forced her to cut back on shifts and be more stringent about overtime. She said she changes her menu offerings seasonally and raises prices more often since the wage boost. –Fox News

What it really forces you to do is make sure that nobody works more than 40 hours,” said Koteen. 

And according to New York City Hospitality Alliance director Andre Rigie, restaurants and other establishments with less disposable income have become challenged – and are all experiencing changes in customer habits. He suggests that state and local governments should try and mitigate the crunch with tax incentives – as well as preserving the so-called ‘tip credit,’ which allows restaurants to count some or all of an employee’s tips towards its minimum-wage contributions. 

“Many people working in the restaurant industry wanted to work overtime hours, but due to the increase, many restaurants have cut back or totally eliminated any overtime work,” said Rigie. “There’s only so much consumers are willing to pay for a burger or a bowl of pasta.”

via ZeroHedge News https://ift.tt/2OKIXEK Tyler Durden

This Is The Same Pattern The Fed Followed Before The Great Depression

Authored by Brandon Smith via Birch Gold Group,

There is immense confusion surrounding July’s Federal Reserve meeting and the rather insane aftermath that has been spurred on in the trade war. The Fed’s latest rate decision of a mere .25 bps cut was seen as “disappointing”, this was then followed by Jerome Powell’s public statements making it clear that this was only a mid-year “adjustment”, and that it was not the beginning of a rate cutting cycle and certainly not the beginning of renewed QE. This shocked the investment world, which was expecting far more accommodation from the Fed after 7 months of built up expectations that the central bank was about to unleash the stimulus punch bowl again.

The question that very few people are asking, though, is why didn’t they? What is stopping them? Everyone from daytraders to the president wants them to do it, yet they continue to keep liquidity conditions tight. In fact, they even dumped another $36 billion in assets from their balance sheet in July. Why?

Keep in mind that the latest Fed decision does two things:

  • First, it is an indirect admission that the U.S. is entering recession territory.

  • Second, it is also an admission that the Fed doesn’t plan to do anything about it, at least, not until it’s too late.

In other words, all those people who thought the central bank was about to kick the can on the current crash in economic fundamentals were mistaken. As I have been predicting for many months, the Fed has no intention of trying to delay the effects of negative conditions any longer. The crash is now a reality that the mainstream will have to accept.

In order to understand why the Fed is withholding liquidity at this time instead of opening the floodgates, it is important to understand central banker motives. First and foremost, the assumption that the Fed is always concerned with keeping the financial system afloat is incorrect. The Fed has allowed the U.S. system to crash multiple times in its 106 year history. In truth, the Fed has created bubble after massive bubble through stimulus and low interest rates, and then crashed these bubbles using liquidity tightening policies.

The latest example of this is the most egregious – The Everything Bubble conjured in the past decade is the largest and most destructive bubble ever devised.

To find anything similar, we have to go all the way back to the onset of the Great Depression.

In 1922-1923, the Fed instituted what was then called the Open Market Investment Committee(later replaced by the Federal Open Market Committee); what some people today might call a “Plunge Protection Team”. The public rationale for this development was to help the Fed enact “monetary policy” which would allow them to stabilize the economy and markets after the recession/depression of 1920-1921. Using the OMIC, the Fed directly influenced the economy, stock markets and credit conditions by artificially lowering interest rates and purchasing government securities and other assets throughout the 1920s.

At first this kind of monetary interventionism in the economy seemed to be working spectacularly. From 1924 onward, the Dow Jones climbed relentlessly higher and recessionary conditions, at least on the surface, seemed to disappear. There were even assertions by economists of the day that recessions and depressions were a “thing of the past”, as were stock market crashes. Sound familiar…?

At the time, short term, long term and overnight lending rates remained relatively low in comparison to the high rates exhibited during the 1920 depression. The Fed stimulated through open market purchases all the way up to 1928. It was then that a sudden and significant shift occurred. The Fed began to deliberately tighten conditions in order to deflate the bubble they created. The Fed hiked interest rates and sold off assets from their balance sheet.

The Fed’s own historic accounts are muddy on this event, yet they do admit that the goal of the central bank was to restrict liquidity in order to disrupt credit conditions that were allowing speculation to thrive. To this day Fed officials act as though they are unaware that their efforts to stimulate actually created financial bubbles. And to this day, they still act as though they are unaware that tightening policy into economic weakness has a tendency to cause those bubbles to implode.

I say “into economic weakness” based on some of the most important underlying indicators of the day. For example, farm mortgage foreclosures increased dramatically in the mid-to-late 1920’s; farming being a huge part of the U.S. economy at that time. Also, outstanding mortgage debt grew by eight times from 1920 to 1929, and consumer debt skyrocketed. The “Roaring 20s” were very prosperous for around the top 5% of Americans, while 70% remained in financial hardship. Again, does this sound familiar?

I find it hard to believe that the Fed is oblivious to the consequences of these actions. Former Fed chairman Ben Bernanke openly admitted that the Fed caused the Great Depression through interest rate manipulation and asset purchases in an address in honor of Milton Friedman in 2002.

So, if they are aware that the actions they took in the 1920s triggered the Great Depression, why are they following nearly the exact same pattern today?

Currently, most major fundamental indicators are showing sharp declines in the U.S. economy. There is no getting around this. The Fed has ignored all of these warnings for the past two years and tightened policy despite them. Whether or not someone agrees with the Fed’s actions is not really relevant; the point remains that the Fed has done all this before, and the result has always been the same – A historic crash.

The rate hikes and asset selling by the Fed in 1928 and early 1929 led directly to the “Black Monday” equities crash. Keep in mind the pattern here: The Fed stimulated through monetary intervention just after the recession/depression of 1920-1921. Around 8-9 years later the Fed tightens liquidity as the fundamentals are already faltering. A year to two years after that stocks finally realize what is happening and they crash.

Today, the Fed has stimulated a historic bubble in the decade after the recession of 2008/2009. This has mostly translated to a vast stock market bubble but very little improvement anywhere else in the economy (unless you actually believe the fraudulent numbers coming from the Bureau of Labor Statistics or the Fed’s GDP calculations). As economic fundamentals including housing sales, auto sales, manufacturing PMI etc. began to decline more aggressively, the Fed started to tighten liquidity. They also raised interest rates as corporate and consumer debt was hitting all-time highs, just as they did in the late 1920’s.

In the aftermath of the Great Depression banking conglomerates were able to buy up considerable hard assets for pennies on the dollar while at the same time consolidating political power. I suggest that the Fed and most central banks deliberately create financial bubbles and then deliberately pop them through tightening in order to engineer economic crashes. This allows them to absorb hard assets cheaply while also increasing their social influence. It is no coincidence that after every major financial crisis the top 1% increase their wealth by a wide margin while everyone else grows poorer.

That said, if we have established a pattern of behavior for the Federal Reserve, as well as a motive, then what happens next?

The Fed will continue to withhold stimulus measures until it is far too late to defuse crash conditions or to kick the can down the road. Jerome Powell told us this is exactly what they would do after July’s meeting. There are some analysts who refuse to believe that this will happen and that the Fed will be “forced” to introduce QE in the near term. This will only happen when the current crash in fundamentals hits its peak, and probably not until there is a sizable crash in stock markets (at least 20% if not more). The Fed will not be “forced” by market conditions to intervene early. They WANT a crash. This is the only explanation for the Fed’s decision and statements in July.

In the meantime, the trade war conveniently kicked into high gear only one day after the Fed broke the hearts of investors looking for an easy profit. The Fed’s minor “rate adjustment” and promise of no QE is all but forgotten as Donald Trump initiated new tariffs on China starting in September. China retaliated with a freeze on U.S. agricultural purchases, the U.S. labeled China a “currency manipulator” for the first time in 25 years, and China is now devaluing the Yuan (though not quite as much yet as many had feared they would).

As expected, the trade war circus has only escalated and there will be no end to it before the next U.S. election. It has also provided perfect cover for the actions of the Fed, and the current economic downturn is being consistently attributed to trade tension rather than the central bank’s policies.

Essentially what the Fed has done is create an economic time bomb, a sensitive explosive that could be set off by the slightest tremor. Any new geopolitical shock event could trigger this bomb. A No Deal Brexit, a shooting war in Iran, etc. The public will look to these events as the “cause” of the economic crisis, when it was actually the central bank that made it all possible.

Another interesting development has been the spike in gold and silver. As I predicted in my article ‘Gold Will Rise Even If The Fed Doesn’t Cut Interest Rates’ published in early July, the Fed has denied investors near zero interest rates and new QE in the near term, and precious metals jumped in price anyway. The dollar even bounced initially in response. Normally this would have caused a dive in metals but the dollar is not the only driver of gold. Market turmoil also causes price rallies in hedge commodities, and we have plenty of that now.

After the crash of 1929, the fed lowered rates substantially, but I would point out that this was no guarantee of stability. In fact, the Fed raised interest rates yet again only a few years later in 1932, which was a death blow to the economy. I would again assert that there are no guarantees that the Fed will not raise interest rates even in the midst of a dramatic downturn. They have done it before and they can do it again.

I would also point out that expectations of the Fed folding to White House pressure are misplaced. Powell has stated that he has no concerns of Trump attempting to fire him and would stay in his position regardless. Also, any attempt by Trump to enforce currency devaluation through a declaration of national emergency could simply be denied by the Fed. This kind of battle between the central bank and the president would lead to a collapse in faith in the U.S. ability to pay off government debt as well as the eventual loss of the dollar’s world reserve status, but that is a subject that must be examined in depth in a future article.

*  *  *

If you would like to support the work that Alt-Market does while also receiving content on advanced tactics for defeating the globalist agenda, subscribe to our exclusive newsletter The Wild Bunch Dispatch.  Learn more about it HERE.

via ZeroHedge News https://ift.tt/2Tq7pKs Tyler Durden

Mall Landlords Are Turning Into Payday Lenders For Their Tenants

Things are going so bad at America’s malls that landlords are no longer just offering rent reductions, they’re becoming payday lenders to tenants that are trying to stay afloat.

Boutique bank PJ Solomon has even organized discussions with several mall owners about employing such a strategy – landlords offering lending – for embattled retailer Forever 21, according to Bloomberg. People in the industry believe that this strategy could serve as a model for the future of the retail sector.

In order to keep distressed companies out of court, rent and other liabilities could be converted into secured debt that would help companies free up working capital. If the retailer later winds up restructuring, the landlord could bid on assets or have a stronger say in the bankruptcy process.

Brick and mortar retail remains a critical situation in the United States. More than 7500 US retail storefronts have shut down in 2019 alone, with names like Payless and Gymboree closing operations. Landlords are faced with the choice of cutting rents or dealing with empty properties that don’t have occupants ready for them. Bloomberg estimates that “less than half” of US malls are going to survive the industry’s disruption.

Mall owners have been flexible (though they haven’t had much of a choice), considering options like outright purchases of bankrupt tenants to help keep stores from going dark. Three years ago, Simon Property Group and General Growth Properties bought Aeropostale, Inc., helping keep more than 200 of it stores active and open.

Scott Stuart, chief executive officer of industry group Turnaround Management Association said:

 “Unless the landlords are going to repurpose their properties altogether, they still have to capture the greatest value they can from retail tenants. If they can get creative about keeping the stores open, it may be a win-win situation.”

Simon Property Group CEO David Simon said in July that the company is considering pursuing investments similar to the way they did with Aeropostale.

Simon said:

“We certainly have the ability to help beyond what you might do on the leases and become an investor in a distressed situation. So we have kind of the ability, together or individually or some combination thereof, to look at becoming more than just a real estate player, but a buyer of these brands.” 

And this could actually put mall landlords at somewhat of an advantage: their proximity to retail stores give them a unique level of insight as to where successful investments could possibly be made in the industry going forward, as it continues to evolve and disrupt.

via ZeroHedge News https://ift.tt/2YyGYYG Tyler Durden

Social Media Civil War

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

The US government has to come up with very very strong legislation for social media, and it has to do that very soon. Because if it doesn’t, it risks those same social media inciting a civil war (that’s no hyperbole, that is real) on American soil.

And beyond as well, but as Donald Trump said about European efforts to curtail Twitter, Facebook et al’s activities, they’re American companies and hence America’s responsibility. Well, cool, but that means you have to do your job, and you ain’t doing it. Those EU efforts by the way were all about financial issues, tax paying etc., not inciting civil wars or being undemocratic. In short, Brussels doesn’t get it yet either.

Now, the Automatic Earth was kicked off Facebook years ago and never received an explanation for why an account with 1000s of followers was just choked in the bud, so I can’t be expected to celebrate its great achievements for mankind. We still have a Twitter account, but how much longer after I post this essay? There’s no telling, and that is the heart of the entire issue. If I, or you, say anything that anyone at these companies don’t like, they can ban us.

Facebook and Twitter continue to operate on the notion that they are private companies who are entitled to ban anyone they don’t like. In the case of Facebook, that covers half the world population. It’s like running the UN as a private enterprise. And it’s not even the owners or the board, they don’t have time to check who they like or not. Instead, they have hired 10s of 1000s of young -because cheap- kids to do the (shadow-) banning for them.

The companies are all based in Silicon Valley, i.e. California, i.e. NOT Trump territory, and the cheap young kids hired to decide what people can and cannot say on their so-called private platforms reflect that territory and its ideas. But Washington can no longer tolerate that. It must act now. The question is: will it?

Why wouldn’t it? Because Facebook, Twitter, Instagram et al have become the US Intelligence’s dream tools to spy on their own people as well as those abroad. The CIA couldn’t even ever have dreamt of a platform that encompasses 3.5 billion people. But Mark Zuckerberg handed it to them on a platter. My idea is Trump would love to go against them, because they go against him and his voters, but US Intelligence, CIA, FBI, may be holding him back from it. Bad, bad idea.

Picked up Charles Nenner on his war cycles at Greg Hunter’s USA Watchdog site, and I wasn’t terribly convinced at first sight, but that was before I read about Mitch McConnell being threatened at his own house.

Civil War Cycle Heating up in America

“Years ago when we talked about my war cycles, I said I am more worried about internal social war in the United States than outside wars. I think there is a bigger chance in the United States than in Europe. They say it’s Trump’s fault . . . . I say it’s the other way around. If the Democrats would just get things organized and people would not get that angry. . . . The media will always take the other side, so they will never solve it. I think it is the Democrats whose fault it is that all these killings are there and not the Republicans. . . .

So, there is a cycle of social unrest in the United States, which is 60 years old. So, you go back to what happened in the 1960’s. It could explode, and I think it is going to explode, and there is going to be a major problem. . . . I don’t know how bad it is going to be, but based on cycles, it has to be worse than the 1960’s. Each cycle always is worse. . . . WWII was worse than WWI, so every cycle becomes worse than the first cycle. . . . I don’t feel comfortable living in the United States anymore because people are so aggressive on everything.

Nenner also talks in that piece about how he visited Putin, who is interested in the war cycles idea, so maybe I should read up on those war cycles.

But that Mitch McConnell story interferes and disperses into the whole tale. There apparently were groups of people outside his home, caught on video, who were calling for him to be violently attacked. And when his campaign posted a video of these people on Twitter, the campaign’s account was shut down.

“Just Stab The Motherfu*ker”: Twitter Suspends McConnell Campaign For Posting Video Of Violent Threats

“I just want him to have a stroke, that is all,” the woman added. “One of those heart attacks where they can’t breathe, and they’re holding their chest and they fall backwards” “He’s in there nursing his broken arm. He should have broken his raggedy, wrinkled-ass neck,” she said at one point in the video. “Everybody needs to show up wherever this ho is at and make him just regret his fucking life, period,” she added. At one point in the protest, a male protester commenting on McConnell’s recent injury said that he may have been the victim of a “voodoo doll” curse. -Daily Caller

Kevin Golden, McConnell’s 2020 campaign manager noted that “Twitter will allow the words of ‘Massacre Mitch’ to trend nationally on their platform, but locks our account for posting actual threats against us.” Golden says that they appealed to Twitter, which stood by their decision, saying that the account will remain locked until they delete the video. Daily Wire reporter Ryan Saavedra was similarly locked out of his Twitter account for posting the video. “Twitter asked me yesterday to delete this tweet,” Saavedra recounted in a massive tweetstorm. “It showed a person allegedly calling for violence against Mitch McConnell. The person appears to be a BLM activist who has met with Elizabeth Warren.”

And I know, people are going to react to this saying: Oh, it’s Daily Caller, Mitch McConnell, Ryan Saveedra, it’s right wing, but that is so far beyond the point it disqualifies you from any conversation at all. Mitch McConnell, aka MoscowMitch or MassacreMitch, is very far removed from being my favorite person on the planet, but he’s the Senate Majority Leader, and as such an important part of the American political system.

If you don’t like that, there’s a mechanism to express that: the ballot box. Calling for him to be physically attacked right outside the place where he and his family live is not done. Unless perhaps you want the same to happen to you at your residence. But you don’t, do you?

This has nothing to do with left vs right anymore. This is about people who have convinced themselves they are so right in their ideas that anything at all is justified to get their views and their points across, including violence. Well, there’s the seeds of your civil war then.

Now, note that this started well over 3 years ago with the invention out of thin air of Russiagate. Now that that ‘theory’ has been debunked, where are the inventors, i.e. losers, going to hide? Apparently in front of Senate Majority Leader Mitch McConnell’s home.

And what’s next? Right-wing protesters setting up camp outside Mark Zuckerberg’s home, or Adam Schiff’s, Jerry Nadler’s, Elijah Cummings’? We may not be that far removed from that happening. And if it does, Facebook and Twitter will be crucial in organizing it.

Which is why Trump and AG Bill Barr must come up with very strong rules, very soon, defining what social media are allowed to do and what not. And barring Mitch McConnell’s campaign from posting direct threats to the man uttered mere feet away from where he lives doesn’t seem to be the way forward.

The Age of -corporate- Innocence that Zuck and @jack keep trying to hide behind while counting their billions has long gone. They have become bigger political players than the New York Times, CNN and Jeff Bezos. Stop them now or you risk the 2020 elections leading to outright warfare. Mr. Trump, sir, this is your responsibility more than anyone else’s. You have no choice. But you do have the power.

Not many Americans, far as I can see, take the threat of a civil war seriously, including you, Mr. Trump. But you really should. Take on the social media, and you’re halfway there to preventing it.

*  *  *

Support The Automatic Earth on Patreon

via ZeroHedge News https://ift.tt/2MQKAOF Tyler Durden