Tag: finance

Since the bank that decides what happens at the NY Fed, and by implication, at the broader Federal Reserve system, is none other than Goldman Sachs, it would be informative to read what none other than Goldman thinks of Ben Bernanke’s thesis advisor Stanley Fischer, formerly head of the Bank of Israel, as the next vice chairman – as he is now actively rumored to become shortly. Conveniently, here is just such a Q&A from Goldman’s Jan Hatzius – the man who feeds Bill Dudley all his economic and monetary insights over lobster sandwiches at the Pound and Pence.

Q&A on Stanley Fischer

• Stanley Fischer?formerly governor of the Bank of Israel and first deputy managing director of the IMF?appears very likely to be nominated for the position of Fed Vice Chairman, according to multiple media reports.
• Fischer is a highly respected academic macroeconomist and policymaker, and would undoubtedly have a substantial amount of influence on the FOMC. When head of the Bank of Israel, he oversaw an aggressive monetary policy response to the crisis which included purchases of longer-term securities.
• With respect to monetary policy at the zero lower bound, he has generally spoken favorably about quantitative easing but has expressed more skepticism about forward guidance. Nonetheless, we think forward guidance will continue to be a key item in the Fed’s toolkit.

Stanley Fischer appears very likely to be nominated for the position of Fed Vice Chairman, according to multiple media reports. According to some accounts, Fischer has already been offered the job by the President and has accepted it, although a formal announcement is not expected immediately.

Q. How does Fischer broadly think about the economy?

Fischer is a highly respected academic macroeconomist. He is credited with helping to lay the foundations of New Keynesian macroeconomics, which sought to place traditional Keynesian theory on a stronger microeconomic foundation. Subscribing to this school of thought, we believe that Fischer’s general view of the world is similar to that of Bernanke and Yellen, with a significant role for active fiscal and (more importantly) monetary policy. In fact, Fischer was Bernanke’s dissertation adviser in graduate school, and Bernanke recently referred to him as a “role model and frequent adviser.” As a result, we see little daylight between Fischer and the current core FOMC leadership with respect to their basic paradigm for thinking about the economy.

Q. How would his appointment affect the dynamics on the Committee?

Fisher is widely seen as a policy heavyweight, having not only run the Bank of Israel, but also served as the chief economist at the World Bank and First Deputy Managing Director (the number two position) at the IMF. Both his academic standing and policy experience suggest that Fischer’s views will be very influential on the Committee.

Q. What are the key points from his tenure as head of the Bank of Israel?

Under his tenure, the Bank of Israel aggressively cut its policy rate from 4.25% to 0.5% in the wake of the financial crisis. Starting in February of 2009, the Bank of Israel joined the Fed in undertaking purchases of longer-dated securities, indicating a willingness to adopt unorthodox monetary policy measures. The stated intention was to “extend the effectiveness of monetary policy onto longer interest rate maturities.” However, later in 2009 the Bank of Israel began hiking its policy rate, in advance of all major global central banks. We do not see this as necessarily indicating a “hawkish” policy bias on the part of Fischer, but rather a reaction to the fact that economic developments in Israel were substantially different from those prevailing in the G4 economies. The Bank of Israel did not adopt explicit calendar- or outcome-based forward guidance under his leadership.

Q. What are his views on balance sheet policy?

Fischer generally holds a favorable view on the effectiveness of balance sheet policy. As noted, the Bank of Israel began a program of longer-dated securities purchases under his watch. He also stated in a November speech at the IMF that one of the key lessons from the financial crisis, in his view, was that monetary policy is not impotent once the zero lower bound on short-term interest rates has been hit. He specifically highlighted the efficacy of the Fed’s QE?which he said was supported by a substantial amount of academic work?and did not explicitly mention forward guidance on the path of short-term interest rates.

Q. What does he think about forward guidance?

In contrast to his statements on QE, he has recently expressed a more skeptical view of forward guidance. Specifically, he noted in September that “if you give too much forward guidance you do take away flexibility,” that “we don’t know what we’ll be doing a year from now. It’s a mistake to try and get too precise,” and that “you can’t expect the Fed to spell out what it’s going to do…because it doesn’t know.” These statements contrast with Yellen’s strong endorsement of forward guidance. In that sense, Fischer’s statements do pose at least some risk to our expectation that the FOMC will ultimately enhance its forward guidance by reducing the unemployment threshold to 6.0%. That said, such a limited number of statements are unlikely to capture all of the nuances of Fischer’s thinking on the topic. One can also argue that his criticisms apply mostly to calendar-based guidance and less to outcome-based guidance, which only requires the Fed to “spell out what it’s going to do” in a more conditional sense. In any case, we have little doubt that Yellen and Fischer would see eye to eye on the need to prevent a large tightening of financial conditions anytime soon, so the slightly greater uncertainty that might result from his nomination is mainly about tactics, not strategy.

Q. What is the likelihood of confirmation?

If nominated, we think Fischer would very likely be confirmed. In the unlikely event that his confirmation faced substantial opposition from Republicans, the recent change to Senate rules requiring only a simple majority to break a filibuster on confirmation votes ensures that he could be confirmed with only Democratic votes.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/nuoxNkDG-Kw/story01.htm Tyler Durden

Since the bank that decides what happens at the NY Fed, and by implication, at the broader Federal Reserve system, is none other than Goldman Sachs, it would be informative to read what none other than Goldman thinks of Ben Bernanke’s thesis advisor Stanley Fischer, formerly head of the Bank of Israel, as the next vice chairman – as he is now actively rumored to become shortly. Conveniently, here is just such a Q&A from Goldman’s Jan Hatzius – the man who feeds Bill Dudley all his economic and monetary insights over lobster sandwiches at the Pound and Pence.

Q&A on Stanley Fischer

• Stanley Fischer?formerly governor of the Bank of Israel and first deputy managing director of the IMF?appears very likely to be nominated for the position of Fed Vice Chairman, according to multiple media reports.
• Fischer is a highly respected academic macroeconomist and policymaker, and would undoubtedly have a substantial amount of influence on the FOMC. When head of the Bank of Israel, he oversaw an aggressive monetary policy response to the crisis which included purchases of longer-term securities.
• With respect to monetary policy at the zero lower bound, he has generally spoken favorably about quantitative easing but has expressed more skepticism about forward guidance. Nonetheless, we think forward guidance will continue to be a key item in the Fed’s toolkit.

Stanley Fischer appears very likely to be nominated for the position of Fed Vice Chairman, according to multiple media reports. According to some accounts, Fischer has already been offered the job by the President and has accepted it, although a formal announcement is not expected immediately.

Q. How does Fischer broadly think about the economy?

Fischer is a highly respected academic macroeconomist. He is credited with helping to lay the foundations of New Keynesian macroeconomics, which sought to place traditional Keynesian theory on a stronger microeconomic foundation. Subscribing to this school of thought, we believe that Fischer’s general view of the world is similar to that of Bernanke and Yellen, with a significant role for active fiscal and (more importantly) monetary policy. In fact, Fischer was Bernanke’s dissertation adviser in graduate school, and Bernanke recently referred to him as a “role model and frequent adviser.” As a result, we see little daylight between Fischer and the current core FOMC leadership with respect to their basic paradigm for thinking about the economy.

Q. How would his appointment affect the dynamics on the Committee?

Fisher is widely seen as a policy heavyweight, having not only run the Bank of Israel, but also served as the chief economist at the World Bank and First Deputy Managing Director (the number two position) at the IMF. Both his academic standing and policy experience suggest that Fischer’s views will be very influential on the Committee.

Q. What are the key points from his tenure as head of the Bank of Israel?

Under his tenure, the Bank of Israel aggressively cut its policy rate from 4.25% to 0.5% in the wake of the financial crisis. Starting in February of 2009, the Bank of Israel joined the Fed in undertaking purchases of longer-dated securities, indicating a willingness to adopt unorthodox monetary policy measures. The stated intention was to “extend the effectiveness of monetary policy onto longer interest rate maturities.” However, later in 2009 the Bank of Israel began hiking its policy rate, in advance of all major global central banks. We do not see this as necessarily indicating a “hawkish” policy bias on the part of Fischer, but rather a reaction to the fact that economic developments in Israel were substantially different from those prevailing in the G4 economies. The Bank of Israel did not adopt explicit calendar- or outcome-based forward guidance under his leadership.

Q. What are his views on balance sheet policy?

Fischer generally holds a favorable view on the effectiveness of balance sheet policy. As noted, the Bank of Israel began a program of longer-dated securities purchases under his watch. He also stated in a November speech at the IMF that one of the key lessons from the financial crisis, in his view, was that monetary policy is not impotent once the zero lower bound on short-term interest rates has been hit. He specifically highlighted the efficacy of the Fed’s QE?which he said was supported by a substantial amount of academic work?and did not explicitly mention forward guidance on the path of short-term interest rates.

Q. What does he think about forward guidance?

In contrast to his statements on QE, he has recently expressed a more skeptical view of forward guidance. Specifically, he noted in September that “if you give too much forward guidance you do take away flexibility,” that “we don’t know what we’ll be doing a year from now. It’s a mistake to try and get too precise,” and that “you can’t expect the Fed to spell out what it’s going to do…because it doesn’t know.” These statements contrast with Yellen’s strong endorsement of forward guidance. In that sense, Fischer’s statements do pose at least some risk to our expectation that the FOMC will ultimately enhance its forward guidance by reducing the unemployment threshold to 6.0%. That said, such a limited number of statements are unlikely to capture all of the nuances of Fischer’s thinking on the topic. One can also argue that his criticisms apply mostly to calendar-based guidance and less to outcome-based guidance, which only requires the Fed to “spell out what it’s going to do” in a more conditional sense. In any case, we have little doubt that Yellen and Fischer would see eye to eye on the need to prevent a large tightening of financial conditions anytime soon, so the slightly greater uncertainty that might result from his nomination is mainly about tactics, not strategy.

Q. What is the likelihood of confirmation?

If nominated, we think Fischer would very likely be confirmed. In the unlikely event that his confirmation faced substantial opposition from Republicans, the recent change to Senate rules requiring only a simple majority to break a filibuster on confirmation votes ensures that he could be confirmed with only Democratic votes.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/nuoxNkDG-Kw/story01.htm Tyler Durden

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

In case you weren’t aware, several of China’s major cities have experienced record-breaking, extremely dangerous levels of smog in recent days. For example, here is a shocking picture of Lianyungang, China:

Photograph: Chinafotopress/Getty Images.

So how did China’s state-run media decide to respond to this environmental and public health disaster? With ridiculous propaganda about the “unexpected benefits” of smog of course. You have to see this to believe it.

From The Guardian:

China’s noxious air pollution has made people smarter, funnier and impervious to missile attacks, the country’s official media reported this week, as a toxic cloud covering half of the country began to lift.

 

On Monday the website of the state broadcaster CCTV published a list of five “unexpected benefits” brought by the smog.

 

It said the haze had unified Chinese people, as they found solidarity in their complaints; equalised them, as both rich and poor people were vulnerable to its effects; enlightened them, as they realised the cost of rapid growth; and “made Chinese people more humorous”, as smog-related jokes proliferated on the internet.

 

It had also helped to educate people, it said. “Our knowledge of meteorology, geography, physics, chemistry and history has progressed.”

As I have said many times before, The Onion is a short.

This year China has registered its highest pollution levels in 52 years, according to state media. More than 100 Chinese cities spanning half the country spent early December enveloped by smog. Both articles attracted such vitriol online that the media outlets quickly took them down. By Tuesday afternoon “benefits of smog” was a trending topic on China’s most popular microblog, Sina Weibo, racking up 240,000 posts.

Priceless.

Full article here.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vMEnnznoRSw/story01.htm Tyler Durden

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

In case you weren’t aware, several of China’s major cities have experienced record-breaking, extremely dangerous levels of smog in recent days. For example, here is a shocking picture of Lianyungang, China:

Photograph: Chinafotopress/Getty Images.

So how did China’s state-run media decide to respond to this environmental and public health disaster? With ridiculous propaganda about the “unexpected benefits” of smog of course. You have to see this to believe it.

From The Guardian:

China’s noxious air pollution has made people smarter, funnier and impervious to missile attacks, the country’s official media reported this week, as a toxic cloud covering half of the country began to lift.

 

On Monday the website of the state broadcaster CCTV published a list of five “unexpected benefits” brought by the smog.

 

It said the haze had unified Chinese people, as they found solidarity in their complaints; equalised them, as both rich and poor people were vulnerable to its effects; enlightened them, as they realised the cost of rapid growth; and “made Chinese people more humorous”, as smog-related jokes proliferated on the internet.

 

It had also helped to educate people, it said. “Our knowledge of meteorology, geography, physics, chemistry and history has progressed.”

As I have said many times before, The Onion is a short.

This year China has registered its highest pollution levels in 52 years, according to state media. More than 100 Chinese cities spanning half the country spent early December enveloped by smog. Both articles attracted such vitriol online that the media outlets quickly took them down. By Tuesday afternoon “benefits of smog” was a trending topic on China’s most popular microblog, Sina Weibo, racking up 240,000 posts.

Priceless.

Full article here.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vMEnnznoRSw/story01.htm Tyler Durden

"If we evaluate an organization's performance by what it promised when it was created, the Federal Reserve has clearly failed the American people," is how Murray Sabrin concludes this documentary on the first 100 years of the Fed's reign. The sad truth, he details, is that "the USD has lost more than 95% of its purcahsing power since the Fed was created and the cost of living has skyrocketed since Nixon severed the last linkage between the USD and gold in 1971." In short, the revolution of 1913 shifted power from individuals, communities and states to the federal government and its powerful allies in the private sector.

 

 

Submitted by Murray Sabrin via dshort.com,

Before we view the documentary, I'd like to put 1913 in historical perspective.

1913 was, in many ways, one of the most extraordinary years in American history. In fact, according to one analyst a revolution took place in 1913.

1913 began with the ratification of the 16th amendment, which gives the federal government authority to tax the income of the American people directly. We will explore the income tax on April 17 next year at a symposium I will moderate. So save the date April 17 at 7 PM in the Trustee's Pavilion.

In April of 1913, the 17th amendment to the Constitution was ratified ending the selection of US senators by state legislatures. Now the U.S. Senators would be elected directly by the people.

And on December 23 President Wilson signed the Federal Reserve Act giving the United States a permanent central bank.

All these events took place at the end of what is known as the Progressive Era, a time of supposedly great reforms to benefit the common man. Half a century ago historian Gabriel Kolko challenged the orthodox view in his trailblazing book, The Triumph of Conservatism. Kolko argued that the progressive era was in reality a time when big business interests used the power of the federal government for their own benefit at the expense of the general public.

One of the last so-called reforms of the era was the creation of the Federal Reserve.

In short, the revolution of 1913 shifted power from individuals, communities and states to the federal government and its powerful allies in the private sector. Hence, the Progressive Era expanded crony capitalism in America.

The documentary, The Federal Reserve: 100 Years of Boom Bust, explores the impact of the Fed on the US economy for the past century.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/K33Vm-isdgE/story01.htm Tyler Durden

If one believes the various US diffusion indices – among which key are the assorted regional Fed surveys the monthly PMI data – and listens to the pithy soundbites of their respondents, the US economy has hardly ever been better (of course, that 60% of “growth” in the past year has been due to inventory accumulation on hope that the consumer end demand will finally come is neither here nor there). However, we don’t exactly believe said indices. Instead, to get a true sense of what is going on, it is always better to listen directly to those who are not only deep in the trenches, but are also accountable to their shareholders every quarter: the various CEOs and CFOs of America’s public corporations. Below, courtesy of Bloomberg chief economist Rich Yamarone, who has compiled a selection of Q3 earnings call soundbites, is an indicative snapshot of the US economy as seen most recently through the prism of executives in a wide range of industries.

Simon Property [SPG] Earnings Call 10/25/13: “…it is clear that the economy has slowed. You’ve seen it with wages, you’ve seen it with employment. Needless to say we don’t have to get into what’s going on in terms of leadership in our country, none of which we use as an excuse, because we put blinders on to the best of our abilities when it comes to that kind of stuff. But we’re operating at a high level in a very slow growth economy, and we’re outpacing the growth in the economy and that’s all that we can do, but we are affected by the economy.”

Caterpillar [CAT] Earnings Call 10/23/13: “….while it looks like there’s a good chance that the world economy could improve next year, there’s still much risk and uncertainty. The direction of U.S. fiscal and monetary policy remains uncertain, and the climate in Washington is divisive. Eurozone economies are far from healthy, and China continues to transition to a more consumer demand led economy. In addition, despite higher mine production around the world, new orders for mining equipment have remained low. As a result, we’re holding our preliminary outlook for 2014 sales and revenues flat with 2013, in the plus or minus 5% range.”

DuPont [DD] Earnings Call 10/22/13: “The macroeconomic environment and in particular global industrial production is improving sequentially, but at a slower pace than we expected three months ago. As a result, we recently lowered our global industrial production outlook for 2013 from 2.5% growth to slightly under 2%.”

Brinker International [EAT] Earnings Call 10/23/13: “The malaise we’ve seen in the category didn’t let up this quarter. Consumer sentiment is guarded at best and consumer confidence remains somewhat volatile. And there’s some evidence that guests have shifted some of their spending to larger ticket items like homes and automobiles. And while we believe this is a temporary phenomenon, but one that has certainly impacted casual dining here in the short term. And while employment rates are showing signs of improvement, casual dining in particular is being impacted by struggles many young adults are facing, particularly those in that 18 to 24 age range. Many are graduating college significantly un- or underemployed, weighted down with debt and often moving back home with their parents. And as a parent with two of those, it’s a scary thought.”

Air Products [APD] Earnings Call 10/29/13: “Economic activity in the second half of 2013 was slower than we had initially anticipated in most regions. Given the current economic conditions, we are planning for economic growth to be modest again in 2014. Globally, for the regions we operate in, we are forecasting manufacturing growth of 2% to 4%. In the U.S., uncertainty in the economy remains, despite the government restart. The combination of unresolved fiscal challenges, weak job growth, low consumer confidence and diminished global demand are likely to continue to act as a headwind on economic growth, despite the positive drivers of lower energy costs and strength in housing. We are forecasting a range of 2% to 4% growth.”

Revlon [REV] Earnings Call 10/24/13: “Total company net sales in the third quarter were $339.4 million, an increase of 1.1% excluding the impact of foreign currency fluctuations as compared to last year. This increase was primarily driven by higher net sales of Revlon color cosmetics despite low year-over-year new product net sales particularly in the U.S. as well as higher net sales of Revlon ColorSilk hair color and Revlon Beauty Tools.”

Timken [TKR] Earnings Call 10/24/13: “It’s now clear to us that the weakness in several of the key markets we serve, including the emerging market infrastructure, mining and energy exploration, is more a structural and will be longer lasting than we had expected. This leads us to believe that the slow steady improvement in demand that we’ve seen thus far in 2013 will extend well into next year. This situation has been exacerbated in the third and fourth quarter of this year by seasonal reductions in demand in some sectors.”

AutoZone [AZO] Earnings Call 9/25/13: “A key macro issue facing our customers today is the reinstitution of payroll taxes back to historic norms. This reduction in our customers’ take-home pay began at the beginning of the new calendar year and at this point it has been difficult to objectively quantify the ramifications of this change, however, we believe this is and will continue throughout the year to be a headwind to our consumer’s spending habits.”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/yART7dufQGM/story01.htm Tyler Durden

If one believes the various US diffusion indices – among which key are the assorted regional Fed surveys the monthly PMI data – and listens to the pithy soundbites of their respondents, the US economy has hardly ever been better (of course, that 60% of “growth” in the past year has been due to inventory accumulation on hope that the consumer end demand will finally come is neither here nor there). However, we don’t exactly believe said indices. Instead, to get a true sense of what is going on, it is always better to listen directly to those who are not only deep in the trenches, but are also accountable to their shareholders every quarter: the various CEOs and CFOs of America’s public corporations. Below, courtesy of Bloomberg chief economist Rich Yamarone, who has compiled a selection of Q3 earnings call soundbites, is an indicative snapshot of the US economy as seen most recently through the prism of executives in a wide range of industries.

Simon Property [SPG] Earnings Call 10/25/13: “…it is clear that the economy has slowed. You’ve seen it with wages, you’ve seen it with employment. Needless to say we don’t have to get into what’s going on in terms of leadership in our country, none of which we use as an excuse, because we put blinders on to the best of our abilities when it comes to that kind of stuff. But we’re operating at a high level in a very slow growth economy, and we’re outpacing the growth in the economy and that’s all that we can do, but we are affected by the economy.”

Caterpillar [CAT] Earnings Call 10/23/13: “….while it looks like there’s a good chance that the world economy could improve next year, there’s still much risk and uncertainty. The direction of U.S. fiscal and monetary policy remains uncertain, and the climate in Washington is divisive. Eurozone economies are far from healthy, and China continues to transition to a more consumer demand led economy. In addition, despite higher mine production around the world, new orders for mining equipment have remained low. As a result, we’re holding our preliminary outlook for 2014 sales and revenues flat with 2013, in the plus or minus 5% range.”

DuPont [DD] Earnings Call 10/22/13: “The macroeconomic environment and in particular global industrial production is improving sequentially, but at a slower pace than we expected three months ago. As a result, we recently lowered our global industrial production outlook for 2013 from 2.5% growth to slightly under 2%.”

Brinker International [EAT] Earnings Call 10/23/13: “The malaise we’ve seen in the category didn’t let up this quarter. Consumer sentiment is guarded at best and consumer confidence remains somewhat volatile. And there’s some evidence that guests have shifted some of their spending to larger ticket items like homes and automobiles. And while we believe this is a temporary phenomenon, but one that has certainly impacted casual dining here in the short term. And while employment rates are showing signs of improvement, casual dining in particular is being impacted by struggles many young adults are facing, particularly those in that 18 to 24 age range. Many are graduating college significantly un- or underemployed, weighted down with debt and often moving back home with their parents. And as a parent with two of those, it’s a scary thought.”

Air Products [APD] Earnings Call 10/29/13: “Economic activity in the second half of 2013 was slower than we had initially anticipated in most regions. Given the current economic conditions, we are planning for economic growth to be modest again in 2014. Globally, for the regions we operate in, we are forecasting manufacturing growth of 2% to 4%. In the U.S., uncertainty in the economy remains, despite the government restart. The combination of unresolved fiscal challenges, weak job growth, low consumer confidence and diminished global demand are likely to continue to act as a headwind on economic growth, despite the positive drivers of lower energy costs and strength in housing. We are forecasting a range of 2% to 4% growth.”

Revlon [REV] Earnings Call 10/24/13: “Total company net sales in the third quarter were $339.4 million, an increase of 1.1% excluding the impact of foreign currency fluctuations as compared to last year. This increase was primarily driven by higher net sales of Revlon color cosmetics despite low year-over-year new product net sales particularly in the U.S. as well as higher net sales of Revlon ColorSilk hair color and Revlon Beauty Tools.”

Timken [TKR] Earnings Call 10/24/13: “It’s now clear to us that the weakness in several of the key markets we serve, including the emerging market infrastructure, mining and energy exploration, is more a structural and will be longer lasting than we had expected. This leads us to believe that the slow steady improvement in demand that we’ve seen thus far in 2013 will extend well into next year. This situation has been exacerbated in the third and fourth quarter of this year by seasonal reductions in demand in some sectors.”

AutoZone [AZO] Earnings Call 9/25/13: “A key macro issue facing our customers today is the reinstitution of payroll taxes back to historic norms. This reduction in our customers’ take-home pay began at the beginning of the new calendar year and at this point it has been difficult to objectively quantify the ramifications of this change, however, we believe this is and will continue throughout the year to be a headwind to our consumer’s spending habits.”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/yART7dufQGM/story01.htm Tyler Durden

Submitted by Michael Snyder of The Economic Collapse blog,

At a time when Wall Street is absolutely swimming in wealth, New York City is experiencing an epidemic of homelessness.  According to the New York Times, the last time there was this many homeless children in New York City was during the days of the Great Depression.  And the number of homeless children in the United States overall recently set a new all-time record. 

As I mentioned yesterday, there are now 1.2 million public school kids in America that are homeless, and that number has gone up by about 72 percent since the start of the last recession.  As Americans, we like to think of ourselves as "the wealthiest nation on the planet", and yet the number of young kids that don't even have a roof over their heads at night just keeps skyrocketing.  There truly are "two Americas" today, and unfortunately most Americans that live in "good America" don't seem to really care too much about the extreme suffering that is going on in "bad America".  In the end, what kind of price will we all pay for neglecting the most vulnerable members of our society?

If you live in "good America", I very much encourage you to read an excellent piece about homelessness in New York City that was just published in the New York Times.  What some young kids have to go through on a nightly basis should break all of our hearts…

She wakes to the sound of breathing. The smaller children lie tangled beside her, their chests rising and falling under winter coats and wool blankets. A few feet away, their mother and father sleep near the mop bucket they use as a toilet. Two other children share a mattress by the rotting wall where the mice live, opposite the baby, whose crib is warmed by a hair dryer perched on a milk crate.

Could you imagine having your own family live like that?  The name of the little girl in the story is Dasani, and every night her family sleeps in a city-run homeless shelter that sounds like it is straight out of a horror movie…

Her family lives in the Auburn Family Residence, a decrepit city-run shelter for the homeless. It is a place where mold creeps up walls and roaches swarm, where feces and vomit plug communal toilets, where sexual predators have roamed and small children stand guard for their single mothers outside filthy showers.

 

It is no place for children. Yet Dasani is among 280 children at the shelter. Beyond its walls, she belongs to a vast and invisible tribe of more than 22,000 homeless children in New York, the highest number since the Great Depression, in the most unequal metropolis in America.

You can read the rest of that excellent article right here.  Sadly, there are countless other children just like Dasani that live like this day after day, month after month, year after year.

Shouldn't we be able to do better than this as a society?  After all, the stock market has been hovering near record highs lately, and Wall Street is absolutely drenched with wealth for the moment.

With so much wealth floating around, why are New York City subways being "overrun with homeless" right now?

Something has gone horribly wrong.

I think that a recent editorial by David Simon, the creator of the Wire, summarized things pretty well.  We are not "one America" anymore, and most of the people that live in "good America" don't really care much about those living in "bad America"…

America is a country that is now utterly divided when it comes to its society, its economy, its politics. There are definitely two Americas. I live in one, on one block in Baltimore that is part of the viable America, the America that is connected to its own economy, where there is a plausible future for the people born into it. About 20 blocks away is another America entirely. It's astonishing how little we have to do with each other, and yet we are living in such proximity.

 

There's no barbed wire around West Baltimore or around East Baltimore, around Pimlico, the areas in my city that have been utterly divorced from the American experience that I know. But there might as well be.

Once upon a time, things were different in America.  Nobody resented businessmen for building strong businesses and making lots of money.  And successful businessmen such as Henry Ford hired large numbers of American workers and paid them very well.  He felt that his workers should make enough money to buy the cars that they were building.  In those days, businessmen were loyal to their workers and workers were loyal to those that employed them.

Unfortunately, those days are long gone.  Today, in business schools all over America students are taught that the sole purpose of a corporation is to make as much money as possible for the stockholders.  Not that there is anything wrong with making money.  But at this point we have elevated greed above all other economic goals.  Taking care of one another isn't even a consideration anymore.

In the old days, big businesses actually needed our labor.  But that is now no longer the case.  Today, corporations are shipping millions of our jobs overseas and they are replacing as many of us with technology as they possibly can.  The value of the labor of the working man is declining with each passing day.

As a result, the fortunes of big business and American workers are increasingly diverging.  For example, the disconnect between employment levels and stock prices has never been greater in this country.  If you doubt this, just check out this chart.

And instead of fixing things, Barack Obama is negotiating a secret treaty which will result in millions more American jobs being shipped overseas.  The
following is a brief excerpt about this secret treaty from an Australian news source…

The government has refused the Senate access to the secret text of the trade deal it is negotiating in Singapore, saying it will only be made public after it has been signed.

 

As the final round of ministerial talks on the Trans-Pacific Partnership resumed on Sunday, Nobel prize-winning economist Joseph Stiglitz wrote to each of the 12 participating nations warning that the deal and the secrecy surrounding it presented ''grave risks''.

So why aren't we hearing much about this secret treaty from U.S. news sources?

If this is going to affect millions of American jobs, shouldn't the mainstream media be making a big deal out of this?

And even if we weren't losing millions of jobs to the other side of the planet, we would still be losing millions of jobs to advancements in technology.  In fact, a CNBC article that was posted earlier this week seems to look forward to the day when nobody will have to worry about the low pay that fast food workers get anymore because they will all be replaced by droids…

Maybe so, but as fast food workers protest low wages and the president of the United States equates hard work with the right to decent pay, the rise of technology once again proves to be no stunt, or laughing matter. McDonald's, where food production is already about as mechanized as food science allows, stopped updating the famous number "served" figure at its restaurants back in 1994—just short of 100 billion—but how long will it be before trillions are served their burgers and fries by a drone, after being cooked by a droid? Those machines work for cheap, and the best thing is, they have no concept of hard work, or dignity, or the foresight to consider whether or not the "cool" things they can do ultimately contribute, or detract, from a strong, consumer-dependent economy.

So what is the solution to all of this?

Where will the millions of desperately needed jobs for "bad America" come from?

Well, it appears that good ideas are in short supply these days.  In fact, some of the ideas being promoted by our "leaders" are absolutely insane.  For example, one prominent entrepreneur recently suggested that the solution to our employment crisis is for Congress to pass an immigration bill which would bring in 30 million more low-skilled workers over the next ten years…

Middle class Americans face a tough future because robots and machinery are eliminating their jobs, according to Steve Case, an entrepreneur who earned roughly $1 billion by creating the first successful internet firm, America Online.

 

But Congress could help the situation by passing an immigration bill that would import some foreign entrepreneurs and almost 30 million low-skilled workers over the next decade, Case told an audience of D.C. lobbyists and lawyers gathered on Tuesday by the business-backed Bipartisan Policy Center.

Exactly how would this improve the employment situation in this country?

I still cannot figure that one out.

But there are people out there that actually believe this stuff.

Meanwhile, many parts of Europe are suffering through similar things.

The unemployment rate in the eurozone recently hit a new all-time high, and the number of people living in poverty in Europe just continues to grow…

Over 124 million people in the European Union – or almost a quarter of its entire population – live under the threat of poverty or social exclusion, a report by EU’s statistical office has revealed.

 

Last year, 124.5 million people, or 24.8 percent of Europe’s population were at risk of poverty or social exclusion, compared to 24.3 percent in 2011 and 23.7 percent in 2008, the Eurostat said in a document published earlier in the week.

So what is going to fix this?

Where are the good jobs for workers in North America and Europe going to come from in the years ahead?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ZE_2LKLopE8/story01.htm Tyler Durden

Of the 25 companies with the largest corporate profits in the world; banking, energy and technology firms are absolutely raking it in. Despite stagnating incomes, these companies made $567,856,000,000 in 2012 alone… here’s the subsidies, tax breaks, and offshoring that helped them do it…

 

Source: AccountingSchoolGuide.com

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/iNCWkL7qabQ/story01.htm Tyler Durden

Despite being found guilty of and fined for manipulations of every other market in the world (from FX to rates to energy), investors small and large continue to play the markets on the basis that they are fair and balanced. Aside from high-profile insider trades; day after day, the oddly high correlations, the obvious spikes, blips, and front-running are ignored… until now. In this brief documentary, CBC asks the critical question "are the world's stock markets rigged?" Amanda Lang concludes "there’s a sense among the general public that nobody seems to be maintaining the integrity of the system." as she highlights case after case "as though everything is rigged!" Conspiracy theory evolves once again into conspiracy fact as the system that's supposed to benefit many, but actually enriches a few.

 

"Historically, the system works because people have confidence in the rules and believe they are treated the same as anybody else.

 

But it’s getting harder and harder to ignore the stories of powerful people cheating the system for their own gain. As the bad apples add up, it gets harder and harder to ignore a troubling realization — “everything is rigged.”"

 

 

 

As we've noted before:

Courtesy of the revelations over the past year, one thing has been settled: the statement "Wall Street Manipulated Everything" is no longer in the conspiracy theorist's arsenal: it is now part of the factually accepted vernacular. And to summarize just how, who and where this manipulation takes places is the following series of charts from Bloomberg demonstrating Wall Street at its best – breaking the rules and making a killing.

Foreign Exchanges

Regulators are looking into whether currency traders have conspired through instant messages to manipulate foreign exchange rates. The currency rates are used to calculate the value of stock and bond indexes.

 

Energy Trading

Banks have been accused of manipulating energy markets in California and other states.

 

Libor

Since early 2008 banks have been caught up in investigations and litigation over alleged manipulations of Libor.

 

Mortgages

Banks have been accused of improper foreclosure practices, selling bonds backed by shoddy mortgages, and misleading investors about the quality of the loans.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3x6uoGSK0Ec/story01.htm Tyler Durden