Month: March 2014

Student And Car Loans Account For 102% Of All New February Consumer Credit

Another month down, another month in which US consumers deleveraged by paying down their credit cards. Although that is not exactly correct: as we showed recently, the New Normal source of credit has nothing to do with revolving debt, or credit cards, or any other old normal notions, and everything to do with student debt, which is used for everything except paying for tuition. That, and car loans of course. Sure enough, in February, of the $13.7 billion in new loans created, $13.9 billion, or 102% of all, was there to fund student and car loans.

 

And looking further back at the data over the past year, of the $172 billion in new consumer debt, a stunning 96% has gone to new student and car loans.

 

So there it is in a nutshell: the deleveraging consumer continues to delever, except when it comes to purchasing Government Motors cars courtesy of government subprime NINJA loans, and of course, student loans, which as we profiled recently, are never getting repaid, and will be yet another taxpayer-funded bail out in a few short years.


    



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Can The United States Rule The (Energy) World?

Submitted by Daniel J. Graeber of OilPrice.com,

Geopolitical crises in Eastern Europe have been met with calls in the United States to use energy as a foreign policy tool. With U.S. Energy Secretary Ernest Moniz asking the industry to make a stronger case, however, it's domestic policies that may inhibit energy hegemony.

"The industry could do a lot better job talking about the drivers for, and what the implications would be, of exports," Moniz told an audience at the IHS CERAWeek energy conference in Houston.

The Energy Information Administration said in its weekly report that gross exports of petroleum products from the Unites States reached 4.3 million barrels per day in December, the first time such exports topped the 4 million bpd mark in a single month.

EIA said the United States is a net exporter of most petroleum products, but crude oil exports are restricted by legislation enacted in response to the Arab oil embargo in the 1970s.

In January, Kyle Isakower, vice president of economic policy at the American Petroleum Institute, said reversing the ban would help stimulate the U.S. economy and lead to an increase in domestic oil production by as much as 500,000 bpd. Current export polices, he said, are "obsolete."

This week in Houston, Sen. Lisa Murkowski, R-Alaska, ranking member of the Senate Energy Committee, said oil could help reposition the United States as the premier superpower.

"Lifting the oil export ban will send a powerful message that America has the resources and the resolve to be the preeminent power in the world," she said.

President Obama can show "true American grit" if he acts quickly and according to precedent. If the ban is reversed, it will be for the benefit of the international community, she said.

Moniz, who said in December the export ban deserves some "examination," said he wasn't yet convinced the case had been made to open the U.S. spigot, however.

For natural gas, House Energy and Commerce Committee Fred Upton, R-Mich., said expanding U.S. liquefied natural gas exports could be used to contain Russia, which dominates much of the Eastern European gas market.

Russia caused a stir with its military response to the Ukrainian situation and Upton said Monday foot-dragging at the Energy Department on LNG exports was putting U.S. allies in Eastern Europe "at the mercy of Vladimir Putin."

The U.S. federal government needs to determine that LNG exports to countries without a free-trade agreement are in the public's interest. The United States doesn't have a free trade agreement with any European country and the current transatlantic agreement up for debate has been stymied by EU concerns over the National Security Administration's cyberespionage campaign.

A January report from the Center for a New American Security said the economic connection that would come from oil exports could manifest itself as "coercive political influence" in foreign affairs. Domestic policy, however, needs to be honed first before the U.S. tries once again to tip the balance of power overseas.


    



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“No inflation” Friday: the dollar has lost 83.3% against…

no inflation 150x150 No inflation Friday: the dollar has lost 83.3% against...

March 7, 2014
Dallas, Texas

I needed a caffeine jolt late this morning after the long journey up from South America.

And while I’m generally averse to aspartame, high fructose corn syrup, and other government-sanctioned poisons, I did briefly consider a hit of Coca Cola as I walked past a vending machine on my way out of a grocery store.

Then I saw the price.

To give you some quick background, this was the same grocery store my mother used to shop at when I was a kid. And if I was really lucky, we’d stop for a can of coke on the way out– 25 cents back then.

Fast forward to today–. I’m a grown man of 35 now instead of a 9-year old kid. And while the store has changed hands a few times, there’s still vending machine near the entrance.

Same coke, same 12 ounces (though now in a plastic bottle instead of an aluminium can).

Price today? $1.50. [note, this is the vending machine price, not grocery store price.]

Put another way, $1 would have bought me 48 ounces of Coca Cola 26 years ago. Today that same dollar buys me just 8 ounces.

This means that the dollar has lost 83.3% of its value against Coca Cola over the past three decades, averaging roughly 6.6% inflation per year.

Some readers may remember the price of Coca Cola being just 5c back in the early 1950s (for a 6.5oz glass)… meaning the US dollar has lost 93.8% against Coca Cola over the past six decades.

Now, we are taught from the time we are children that ‘a little inflation is good…’

And when central bankers tell us they’re targeting an inflation rate of 2% to 3%, that certainly doesn’t seem so bad. 2% is practically just a rounding error. But bear in mind a few things–

1) An inflation rate of 2% is not price stability.

As Jim Rickards frequently points out, even with just 2% inflation, a currency loses over 75% of its value during an average lifespan. This can hardly be considered monetary stablilty.

And this practice of gradually plundering people’s purchasing power over time is incredibly deceitful.

2) Even if, they rarely meet their target.

As this case shows, 6.6% certainly ain’t 2%. The official statistics and research papers may say 2%. Reality is much different.

3) Wages often don’t keep up.

According to the US Labor Department, the median weekly wage back in 1988 was $382… or roughly 18,336 ounces of Coca Cola.

Today the median weekly wage is $831.40… or just 6,651.20 ounces.

So as measured in Coca Cola, the average wage in the Land of the Free has declined by 11,684 ounces per week– a 63.7% decline over the last three decades.

You can make a similar calculation denominated in Snickers bars, gallons of gas, etc.

If you have a big picture, long-term view, it’s clear that standard of living is falling.

Some readers may remember decades ago– a single parent could go out and, even with a blue collar job, comfortably support a growing family.

Today, dual income households struggle to keep their heads above water. This is the long-term plunder of inflation.

And just to give you a reminder of what things used to cost, I’ve pulled a page from the March 7, 1988 edition of the Bryan Times of Bryan, OH: 26-years ago today.

inflation federal reserve No inflation Friday: the dollar has lost 83.3% against...

You can scroll through the paper and note the prices:

25c for a dozen eggs. 69c for a loaf of bread. 49c for a pound of Chicken. A brand new Mustang LX for just $9203.

That’s the Federal Reserve for you. 100 years of monetary destruction and counting.

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Femen Brings Its Brand of Topless, Feminist Crazy to Times Square in Protest of Putin’s Invasion of Ukraine

Femen protest Putin in Times SquareUkrainian feminist group
Femen bared their perennially-painted breasts in Times Square
Thursday as part of an international protest campaign against

the Russian forces in Crimea. “Fuck Putin!” Femen organizer
Inna Shevchenko and her bevy of topless rad-fems yelled as they
ripped apart Russian flags, hailed “the glory of the Ukraine,” and
implored the U.S. and the European Union to “stop talking (and)
start acting.”  

An iota of background on Femen: It’s a collection of militant
and mostly blonde Ukrainian women who travel the world (at
the behest of a man named Victor Svyatski) getting topless and
making a fuss over whatever cause is hot that week. As you can
probably tell, I am no great fan. Femen’s philosophy is incoherent,
and its tactics nonsensical—but they do know how to create a
spectacle. Bet the Times Square tourists weren’t expecting to
encounter this on their way between the faux Ray-Ban booth and the
wax museum: 

In a Starbucks after the protest, Shevchenko told
Vice that Russian President Vladimir Putin’s actions
weren’t surprising. “He wants to become a tsar. He wants to have an
empire,” she said.

“He’s not the guy who wants to care about money, like a small
politician like [Viktor] Yanukovych, who wants to put all the gold
in his apartment. … He’s not about money. He’s about power.”
 

Meanwhile, back in Crimea, Femen activists faced a much rougher
time than counterparts protesting stateside. Two
were arrested. A statement on the Femen
website says activists were also “severely beaten” by
“pro-Russian activists.”  

 

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Pesident Obama Explains How He Will Blow The Student Loan Bubble Even Bigger – Live Feed

Despite warnings from various members of the Fed that Student Loans are becoming troublesome, we suspect President Obama’s address this afternoon on expanding opportunities to go to college will be nothing but more pumping free money into a hyper-inflating (and increasingly worthless) higher education system…

 

 

As we previously noted,

What’s worse, while the 90+ day student debt delinquency rate did
post a tiny decline from 11.8% to 11.5% in Q4, on a total notional basis
due to the increase in outstanding balances, as of this moment
the amount of heavily delinquent student loans has just hit a fresh
record high of $124.3 billion, up from $121.5 billion in the prior
quarter.

So: when does the Fed finally admit i) there is a student loan
problem and ii) the only way to solve said problem is to promptly
monetize it?

Finally, putting new “debt” creation in perspective, in 2013 just student and car loans alone represented 108% (that’s right, more than all) of total household debt created.

 

That won’t end well..


    



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Russian Troops Storming Ukraine Air Force Base In Crimea, Time Reports Citing Crimea TV

More lies, propaganda, or for once, the truth? Just out from Time’s Simon Shuster:

Then again, considering the source is disinformation central Ukraine Pravda, take it with a huge grain of salt. More as we see it.


    



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More Bans! San Francisco Bans Plastic Water Bottles

The San Francisco Board of Supervisors
voted 11-0 to ban the sale of plastic water bottles on public
property. Supervisor President David Chiu
declared:

“It was not long ago that our world wasn’t addicted to plastic
water bottles… It wasn’t until the 1990s that the now $60 billion
plastic bottle water industry experienced an enormous growth based
on massive marketing and distribution campaigns.”

Yea, and it also wasn’t long ago before people were addicted to
dishwashers, microwave ovens, mobile phones, the Internet,
Facebook, Amazon 2-day delivery, and other technological advances
and modern conveniences that make our lives more productive.

There are concerns that the ban on plastic water bottles could
harm public and non-profit events that sell water bottles to raise
revenue. Banning water alternatives in public places will also
direct attention toward the quality of the city’s drinking water
infrastructure.

Apparently this is part of a “zero-waste goal.” The city has

decided to aspire “to have zero waste going to its landfill by
2020.” What other waste-generating products will the city ban
next?

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Hey Apple and Chipotle: Get Real About Corporate Social Responsibility!

Have you heard
about last week’s annual investor meeting for Apple? Head honcho
Tim Cook told investors who questioned the company’s commitment to
sustainability to go piss up a rope and dump the stock.

Is that a good idea or a bad idea? I’m not sure but, as I
write at Time, a lot of the discussion about corporate social
responsibility is just good old-fashioned B.S.:

Can we get real about corporate social responsibility (CSR), the
idea that businesses shouldn’t just increase returns for
shareholders but also benefit for free the larger world around
them? Between Chipotle’s cryptic warning that global
warming threatens the planet’s guacamole supply chain and
Apple CEO Tim Cook seemingly forsaking return on investment (ROI)
for social causes, CSR’s stock is spiking like Pets.com in the late
1990s.

“People, not profits” may be a powerful slogan
but it’s a really stupid business plan, mostly because it assumes
the two priorities are mutually exclusive – and that businesses
that go belly up have any chance of helping anybody. So when
a “visibly angry” Tim Cook told Apple investors who
question man-made climate change to “get out of this stock” at the
company’s annual shareholder meeting last week, he wasn’t really
putting ideology over profits. In an economy where many people are
willing to pay a premium to feel good about themselves or morally
superior to less-enlightened souls, he was bidding up his company’s
stock price.

Read
the whole thing.

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Caption Contest: Napoleon Complex Edition

Hiding behind the big boys (literally) appears to be the m.o. of France’s President Hollande who declared today that “there will be no referendum in Crimea without Ukraine’s agreement,” and added that it is a necessity for Russia to “accept the solution.” We suspect Vladimir Putin will have something to say about that but who is going to argue with Hollande given the following image…

 


    



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Bitcoin Software to Utilize Tor Anonymity

Bitcoin isn’t anonymous, but the idea of an anonymous digital
currency has wide appeal. Core Bitcoin developer Mike Hearn
says he’s working on an interesting project to deal with
remaining privacy holes. Essentially, a piece of Bitcoin and the
Tor anonymity network will be “stitched
together” in updates expected next month.

Bitcoin is pseudonymous, a step below anonymity. The public
ledger, or the blockchain, lists the details—the who, when, what—of
every transaction ever made. The
Bitcoin ecosystem is a jumble of apps built on top of the
original network protocol. Some of these are powered by bitcoinj, a
Java implementation of the protocol that Hearn plans to tie to
Tor. 

The Tor anonymity network is software that funnels data through
relays and encrypted layers in order to preserve user privacy and
anonymity. Once Hearn makes the promised updates, all transactions
made with bitcoinj-powered wallets will be routed through the Tor
anonymity network, making the original data and IP addresses much
more difficult to trace.

Law enforcement will certainly denounce this project.
Control-happy regulators and
politicians claim that an anonymous currency will merely fuel
drug purchases and nefarious criminal activities. Although,
criminals who want to remain anonymous would probably have an
easier time using cash.

There are plenty of legitimate uses for an anonymous network.
Hearn expects that the NSA has already “de-anonymized” the block
chain through IP tracking. Hearn
told Forbes:

The fact I use Bitcoin isn’t a secret, but I don’t want
all my transactions in an NSA database. When I use Bitcoin in a
bar, I don’t want someone on the local network to learn my balance.
The way Bitcoin is used today, both those things are
possible.

Giving friends and family access to a running list of completely
legal purchases is obviously not appealing for many non-criminals.
Plus, in order for a business account to operate on Bitcoin, it
helps to shield competition from a list of every transaction the
company has made.

Transaction anonymity is a pretty popular idea. Other projects
have evolved to deal with Bitcoin’s anonymity “flaw.”
ZeroCoin, to be released May 2014, is a stand alone currency with
anonymous features built in. Dark Wallet, directed by the creator
of printable guns, Cody Wilson, is also in the works.

Although integrating Tor is a step for Bitcoin privacy, and
certainly is an impediment to eager snoops, imperfections remain.

According to Coin Desk, Bloom Filters increase
transaction efficiency but “bleed a lot of information.” Hearn
plans to address this in future updates, but added that there is no
“silver bullet” to Bitcoin transaction anonymity.

Read more of the details
here and
here.

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