Venezuela’s opposition to socialist dictator Nicolas Maduro this week has called on the Organization of American States to help them oust him, Time reports.
At the same time, President Obama in continuing to (bombastically) refer to that nation’s economic and political troubles as a threat to U.S. national security, renewing a similar declaration made last year:
The Obama administration first issued the executive order against crisis-hit Venezuela in March of last year…
In renewing the order, the president mentioned the same list of abuses cited last year: persecution of political opponents, curtailment of press freedoms, use of violence and human rights violations….
In renewing the measure, Obama reiterated that the situation in Venezuela constituted an “unusual and extraordinary threat to the national security and foreign policy of the United States” and that he was declaring a “national emergency” to counter that threat….
The “national emergency” declaration is a tool U.S. presidents possess that allows them to impose sanctions on a country under certain circumstances and go beyond what Congress has approved.
Agricultural production in Venezuela had already been hobbled by the socialist government’s land confiscations and price controls, which often force farmers to sell at a loss. As domestic food production dropped, Venezuela turned increasingly to imports. But with oil prices plunging, the country now has fewer petrodollars to purchase food abroad.
The problem is compounded by Byzantine currency controls that make it more difficult for private companies to access the dollars needed to import food. And many products that are produced here are smuggled to neighboring Colombia to be sold for big profits. The resulting scarcity has helped fuel the world’s highest inflation and produced long lines at supermarkets as people clamor for milk, meat, pasta and other staples.
Maduro intends to try to turn the army, still faithful to him, into a giant militarized bunch of farmers to try to turn things around on the food front.
Bloomberg Business notes, in a story based on an interview with opposition governor Henri Falcon, that Maduro is just doubling down on bad management and tyranny:
Maduro has barely acknowledged his electoral defeat [in Congress] in December, ceding little ground to the opposition. He’s sidestepped congress’ decisions through the courts and vowed to block its central initiatives, such as giving deeds to public housing residents and granting amnesty to dozens of jailed politicians and activists….
Temir Porras, who was a top aide to Maduro till 2013, said the government finds itself with few answers. “The problem of Chavismo is ideological: How do I face a situation like this without employing socially regressive policies?” he said in an interview….
In other words, socialism is a horrible failure; we are socialists, though, and just can’t back down since any move that might actually get the economy working would be seen as “socially regressive.”
….just over three years into his political afterlife, the ghost of Hugo Chávez is as inescapable as el Comandantehimself was in life. To his remaining supporters, he goes by many names: “the Giant,” “the Eternal One,” “Redeemer of the Poor,” and even “Galactic Commander.” ….
Images of the late president, or sometimes of his signature or his disembodied eyes, are ubiquitous in Caracas, Venezuela’s capital. And he’s not always alone. In colorful murals he can often be found hanging out with a veritable A-list of revolutionaries, including Che Guevara, Karl Marx, Simon Bolívar, and Jesus Christ…
This quasi-religious veneration of Chávez by his comrades is not known for its subtlety. In 2014, the government pushed an “Our Chávez” reboot of the Catholic “Our Father” prayer, which included supplications to “lead us not into the temptation of capitalism and deliver us from the oligarchy,” thereby reaching new heights of pathos.
Various local religions, they report, indeed are already quasi-deifying Chavez. And why not? When his policies have lead to:
a nation of thirty million scavengers, desperately seeking rare food and medicines, and increasingly without electricity or running water. As a result, Maduro’s government is increasingly reliant on the Chávez legacy as a justification for remaining at the helm. And, like any pre-industrial regime worth its salt, it knows that when the peasants are restless, a little medieval pageantry can perhaps set them right. Despite the country’s collapsed economy, festivities are in the works to commemorate March 5, the official day of his passing.
In other political turmoil from Venezuela:
• Maduro’s government is unsurprisingly launching an investigation into possible charges against opposition leader Henrique Capriles (who is leading a referendum campaign to oust Maduro) over alleged financial irregularities from his past post as governor of the Venezuelan state of Miranda).
• Students are in the streets protesting a Supreme Court decision that, according to the BBC, “curtailed the power of the opposition-controlled National Assembly to review government appointments of Supreme Court justices.”
• Venezuela’s central bank is trying to sue, in U.S. District Court in Delaware, a website that publishes black market bolivar-dollar exchange rates, accusing it of being responsible for cyber-terrorism and destroying the bank’s reputation (as it continues to “manage” ruinous inflation) and in fact being responsible for the inflation it tries to honestly chronicle.
In his most recent Gold Videocast for SchiffGold, Albert K Lu interviewed John Rubino, founder of DollarCollapse.com. Rubino had a pretty compelling explanation for why there wasn’t a massive, sustained economic collapse a decade ago, and why he thinks it’s still lurking on the horizon.
"The reason that we’re still here, when we really should have fallen apart based on how much debt there was out there, and various other measures of instability, is that a printing press has turned out to be a great tool for fooling people.”
Rubino pointed out that this is the first time in human history that all of the world’s governments are armed with a basically unlimited fiat currency printing press. The ability to create money out of thin air has allowed governments to take on more debt than anybody imagined feasible. Rubino noted that economists 20 years ago couldn’t have imagined $7 trillion of bonds trading at negative interest rates, and global debt at 300% of global GDP, but that’s where we are today. He went on to explain how the entire world pitched in to help the Federal Reserve keep things limping along after the 2008 meltdown. For instance, post 2009, China borrowed more money than any country has ever borrowed in history.
Rubino said there’s no way to know when the economy will hit the wall, but it will likely be pretty soon. At some point central banks and governments will run out of the ability to borrow and print, and they will have to start living within their means again.
According to Rubino, It’s going to be a painful transition. So, what does this mean for gold? Lu and Rubino share their insights.
Follow along with the full transcript:
Albert: Gold storms up as U.S. stocks struggle to extend streak. Hi, I’m Albert Lu, welcome to SchiffGold. That was a headline out of MarketWatch, and as the global financial turmoil continues, interest in gold appears to be growing. Gold is up nearly 16% this year, and as we approach the Fed’s March meeting, it’s looking more and more like that highly anticipated rate hike could be off the table. Joining me now is John Rubino, who manages DollarCollapse.com, and he’s also the co-author, The Collapse of the Dollar and How to Profit From It, as well as many other fine books. John, thanks for joining me today. How are you?
John: Good, thanks for having me on, Albert. Good to talk to you.
Albert: Good to talk to you, John. I have to ask you, first of all, when you went out and got that domain, dollarcollapse.com, were you thinking a two-year lease?
John: Yeah, I actually did expect this particular gig to last just a couple of years because this was 2004 when I set up the original dollarcollapse.com website. And it really did seem like the global financial system was on the precipice. I thought I would chronicle our descent into financial chaos for a couple of years, and then move on to something else. But the story has turned out to have legs. We have kept it together more or less in ways that I never expected us to be able to. And that the reason that we’re still here, when we really should have fallen apart based on how much debt there was out there, and various other measures of instability, is that a printing press has turned out to be a great tool for fooling people. This is the first time in human history that all of the world’s governments are armed with basically an unlimited fiat currency printing press. And so, it’s allowed them to take on more debt than seemed feasible based on history. And to manipulate interest rates down to levels that I don’t think anybody really expected. We’re in a negative interest rate world now, or we’re entering it. And if you’d gone back 20 years, and asked 100 economists if today’s world was possible, they would have said, “Nah, no way. You’ll never have $7 trillion of bonds trading at negative interest rates, and you’ll never have global debt at 300% of global GDP; that’s just not possible.” And yet here we are. My sense and my take on this is that we didn’t actually fix anything. We basically just bought ourselves time in which to build up even more debt to leverage ourselves even more catastrophically, and then make the eventual reckoning that much more serious. I think what’s coming is going to be unlike anything that has happened in living memory, certainly, something comparable to the Depression, but probably much worse. And so we’ve got very interesting decade ahead of us, Albert. And I wish that the details were easily predictable, but they’re not, except to say volatility and chaos are the rule for our immediate future here.
Albert: Yeah. I think you hit on something very important there. Basically, we have I think, it’s close to half of a sovereign debt trading in negative yields. Negative yields persisting up the yield curve, all the way to five years in some cases. I think it has helped a lot, and maybe this is what was not factored into some of our calculations is how much the world, the rest of the world would assist the US central bank in this game that we’re playing. If the US had to carry the entire economy on its back, I think we would have seen that, maybe not hyperinflation, but we would have seen something very bad. By spreading it around, by having the Bank of Japan help, by having the ECB help, I think this has kind of spread the symptoms of the catastrophe that you and James wrote about.
John: Yeah. Post 2008-2009, China for instance borrowed really more money than any country has ever borrowed in history. And that was the big driver of the “recovery” of the last few years. They just bought up all the natural resources in the world and drove the prices of iron ore, and copper, and timber, and oil through the roof. And that created a global resource boom. And that basically pulled us out of the, what would have been a depression after 2008-2009. But of course, that was done via huge amounts of new debt. And so, now the world is something like $60 trillion more in debt than it was back when debt was so accessible that it almost blew up the global financial system in 2008. And yeah, the European Central Bank and the Bank of Japan, and the US Fed, along with the People’s Bank of China, and the Chinese government have kind of gone back and forth borrowing money, and then lending it to each other. And they’ve enabled the system to hold on for much longer than it would have if it was just one country doing things like this. But that’s not a perpetual motion machine; we can’t keep going on like this forever, because we are building up more and more debt. And the big banks are bigger than ever, they’re more leveraged than ever. This time, the emerging markets have been pulled into it with something like $9 trillion of dollar denominated debt that they can’t manage. So at some point, it blows up. And then the question is, is it this year, or is it 2017, or 2020? There’s no way to know when we hit that wall. But I think it’s highly likely if not absolutely guaranteed that we do hit the wall pretty soon. We can’t go on for decades more as we’ve gone on for the past three decades. At some point, we basically run out of the ability to borrow, and print, and we have to start living within our means again. And at that point, we have to go through a transition from what is today unsustainable, to whatever we do after this that is sustainable. And it’s going to be a really painful transition. And there’s really only two ways to get there; either all the debt or most of the debt that we’ve taken on defaults, and we have a 1930s style deflationary depression, or we inflate our way out of it. That is we create enough new currency to make today’s debts manageable, but in doing so, we risk people losing faith in the fiat currencies that we’re creating with such abandon, and end up with a currency crisis, and that’s it. Those are our two choices. The next few years will determine which of those courses that we end up, and which kind of crisis we’ve chosen, but we can only chose one or the other, that’s all that’s left.
Albert: And clearly the preference of the big thinkers at the world central banks would be to inflate the debt away, hence to target positive inflation rates, those are supposed to be a good thing. It’s 2% now; I can see that very well going higher. But the consequence of that, of course, is that the market recognizes the price inflation. Now, gold has not been responding, but it seems like perhaps this correction is coming close now because gold is starting to respond the way you would expect it to respond. And part of the consequence of having this be a worldwide effort, all of the central banks participating in different currencies is sometimes the appreciation in gold is masked, meaning that the US dollar as a unit of account, the US dollar has not been participating in this currency war, but in other currencies, I believe you would have seen gold rising.
John: Yeah. Well, the US dollar has been the strongest currency in the world for the last few years. And that’s largely because…we’re not in great shape, but we look relatively good compared to the rest of the world. So a lot of capital is flowing in to the US and that creates demand for dollars, and pushes up the value of the dollar. But yeah, as you said, if you value gold in virtually any other currency it’s up now. So gold’s bear market ended some time in 2013 or 2014 depending on the country that you’re focusing on, and it’s been going up ever since. And finally, at long last, it has started to go up in dollars. So, whether that’s the beginning of a new leg in the gold market, or just a kind of a fake out before we get one more down leg before the gold market resumes, we can’t know that until retrospect, until afterwards. But when the gold bull market resumes, this is what it’ll feel like, this is what the early stage will be like. And so now the question is, will it continue through the rest of the year? I don’t know. But eventually, because gold is the form of money that humanity has used for the last 3,000 years, and it’s held its value for that entire time, it tends to be where we hide out when things get crazy. And as things get crazier, and crazier, and more and more capital is going to flow into gold, and also into silver, so other things being equal, you’ll see upward pressure on their prices even when priced in dollars over the next few years. Whether it’s a gradual kind of, a little at a time bull market, or a parabolic one when all of a sudden in the space of a couple of months we see another $1,000 added to gold’s dollar price, we can’t know, because that depends on the other stuff that’s going to happen out there. Will we have a raging war in the Middle East that distorts global trade? Will China have a hard landing credit crisis? Is the European Union or the Eurozone going to spin apart? And is the dollar going to do something crazy like spike from here or fall from here? We can’t know any of these things. But we can say with a fair degree of certainty based on history that things are going to be really volatile, and they’ll get crazier and crazier as this debt really bites. As our bad decisions of the past come home to roost, and the globe will be one of the beneficiaries of that, because that’s the way it’s worked in every previous currency crisis. You can go back to the Roman Empire, and France in the 1700’s, and Weimar, Germany; it’s always been the same. Money flows out of these mismanaged fiat currencies, and into real money like, gold and silver. There’s no reason to think it won’t happen again, and the only question is timing.
Albert: John, with just a minute left, I want to get your thoughts on two points. We got a fairly important decision coming up in March; the Fed is going to decide whether to pause or to go ahead. I think that this time, it may be different, meaning that this time, gold will win either way at least relative to the stock market, because if the Fed eases, sure stocks will get a break. But investors seem to be sensitized to inflation now, so I would expect gold to go up more. If the Fed tightens, gold may go down, but I think the stock market will just be obliterated. And so, I want to get your thoughts on that. And then finally as we close out, where do you see gold going by the end of the year?
John: Well, let me take the second question first. I am terrible at making short-term predictions, so I have absolutely no idea. Gold can be $900 or $2,000 by the end of the year. And both crises would be justifiable based on what’s going on immediately in the financial markets. But the first part of your question, I think, is very interesting, because it is possible that no matter what happens to the stock market and bond yields, and things like that, that capital is going to flow into gold going forward, because gold responds not to any particular set of economic data, but to the volatility and the stress in the markets. So if things seem really unpredictable, and really volatile, and people get scared, they will move some of their money into gold. And lots of things can scare people out there – a parabolic rise in stock prices that coincide with a bear market in bonds that might send people into precious metals. But a collapse in the stock market, same thing. What we saw in January of this year, when stocks went down hard, and a lot of that money that was taken out of the stock market flowed into precious metals; so gold went up, that could happen too. I think in the longer-term, I have no idea about this year, but in the longer term gold is a beneficiary of the instability that necessarily flows from borrowing too much money. And so, I think people who buy gold gradually, right now, not all at once at any given price, but a little at a time over a long period of time are going to be glad they did that five years from now. And who knows what the world will look like, but I think it’ll be a more stressful world than today’s, and gold will be an antidote to the stress of the world in that time.
Albert: That’s very good advice, John. We’re out of time, so I’ve got to let you go. Thank you very much for joining me on the program today. I really appreciate it.
In his latest note tited “The Calm before The Storm”, Nomura’s traditionally downcast Richard Koo is not too excited about the market’s future prospects, in fact quite the opposite and makes the point that since QE was no game changer, not only is there no clear way out, but “the price for QE has yet to be paid.”
What does that mean for risk assets:
Recently, for example, the markets took a tumble when the Fed moved to normalize monetary policy. The US central bank responded by delaying the normalization process, which stabilized the markets, but eventually fears of falling behind the curve on inflation will force it to resume the process. That will lead to renewed market turmoil in a cycle that has the potential to repeat itself endlessly.
I expect this balancing act between the monetary authorities, who want to push ahead with policy normalization, and the markets, which violently reject each such attempt, will persist for an extended period of time, interspersed with periodic lulls like the current one.
Some further insight from Nomura’s Richard Koo:
For more than half a century after macroeconomics began to develop as an independent academic discipline in the 1940s, the emergence of breakthrough products such as aircraft, automobiles, home appliances, and computers provided companies in the developed world with a host of investment opportunities. Perhaps it should not be surprising that economic theorists at that time were unable to envision a world of no borrowers.
Economists were focused instead on the problem of how to effectively allocate a limited pool of private-sector savings. Government borrowing and spending was seen as something to be avoided since it was a symbol of inefficient resource allocation.
And until Japan caught up with the west in the 1970s, economists’ attention was focused on monetary policy since there was a surplus of domestic private-sector borrowers and no one envisioned capital fleeing the developed world for the EMs. This was the world of Phases 1 and 3, in which there were enough borrowers. Given the historical backdrop, it is perhaps only natural that economists at that time moved in the direction they did.
Macroeconomics did not keep up with changes in global economy
Subsequently, the global economy underwent major changes, with manufacturing shifting to Asia and the developed economies—almost without exception—experiencing asset bubbles that eventually burst, triggering balance sheet recessions. These economies entered Phases 2 or 4 as a result.
The discipline of economics, however, did not keep pace with these changes. Economists continued to build their theories and models based on assumptions that had only been valid in the developed economies of the 1950s and 1960s.
That is the main reason why most economists, whether in academia or the private sector, were completely unable to predict what has happened since 2008. They could not imagine a world where the private sector is actually minimizing debt instead of maximizing profits. Even now, the discipline tends to suffer from the bias that monetary policy is inherently good and fiscal policy inherently bad.
Unconventional monetary policy creates problems when it is wound down
These preconceptions underlie the current policies of inflation targeting, quantitative easing, and negative interest rates. Because central banks have pushed ahead with these policies even though there is no reason why they should work at a time of no borrowers, excess reserves created by the central bank now amount to $2.3trn in the US, or 15 times the level of statutory reserves, and to ¥222trn in Japan, or fully 26 times statutory reserves.
I have used the term “QE trap” to describe the problems that must be confronted when such policies are unwound. They can trigger severe market turmoil that cannot be avoided no matter how extensive the authorities’ dialogue with market participants.
Recently, for example, the markets took a tumble when the Fed moved to normalize monetary policy. The US central bank responded by delaying the normalization process, which stabilized the markets, but eventually fears of falling behind the curve on inflation will force it to resume the process. That will lead to renewed market turmoil in a cycle that has the potential to repeat itself endlessly.
QE was no game changer, and price has yet to be paid
Professor Krugman, who came up with the idea of lowering real interest rates by combining an inflation target with quantitative easing, has finally acknowledged that these measures were no “game changer” capable of sparking an economic recovery. But he still insists they did no real harm. (http://ift.tt/1YbnzTq)
While that may be the case during a balance sheet recession, when there is no private loan demand, these policies can cause huge problems when they are wound down (witness the market’s recent gyrations). The global economy has now entered a phase characterized by this kind of instability.
Inasmuch as there is no clear way out, I expect this balancing act between the monetary authorities, who want to push ahead with policy normalization, and the markets, which violently reject each such attempt, will persist for an extended period of time, interspersed with periodic lulls like the current one.
While Christianity remains the largest religion in all 50 states, Islam, Judaism, and Buddhism are on the rise across the nation.
Chart: BofA
As the chart shows, Islam is the second largest religion in 20 states (mostly in the Midwest and South), Judaism in 14 states (mostly in the Northeast), and Buddhism in 13 states (mostly in the West).
Starting this time last year we added over 40 Million Barrels to US Oil Stockpiles. The question is can storage facilities handle another 40 Million Build in Oil Stocks over the next 7 weeks?
This is the email that David Little, Chairman and CEO of Houston-based DXP Enterprises sent to his employees to explain why, “due to bank obligations and to continue a positive cash flow profile” the company has to freeze 401(k), why it is cutting pay in some cases as much as 60% and why many employees are about to lose their jobs in the middle of what is an “oil and gas depression.” It is a disturbing read.
Dear DXPeople,
As you well know, these are very challenging times for everyone in the oil & gas industry and other industrial markets. We are working hard to navigate both the challenges in oil & gas and an industrial recession plus what appears to be continuing softening. Normally, when upstream oil and gas is down the rest of the industrial market is booming, not this time!
This past Friday, we announced our fourth quarter and year-end results. Our revenues were down 17% from a year ago and 27% from the fourth quarter of 2015 versus the fourth quarter of 2014. Fiscal year 2016 has started off even weaker than we anticipated with January sales down an additional 12% from December. Oil and gas related companies across the country have reported sales declines as high as 50% – 60%. All of this in the midst of declining industrial confidence and performance. Furthermore, the forecast by experts suggests the oil & gas economy will get worse before it gets better. We are currently 20 months into this oil & gas down cycle which is also unusually long for a correction.
It goes without saying but over the past twelve months, we have all made efforts to contain costs and improve operations where possible. All, while focusing on growth. For this, we thank all of you for the sacrifices, discipline and effort you are making each and every day. But I am sorry to say that because of bank obligations and to continue our positive cash flow profile, we have to do more. The leadership team and I have been reviewing line-by-line every location, budget and expense, on how we can reduce costs while considering every decision through the prism of our values, culture and priorities. While we fulfilled a $2.9 million company match to our U.S. 401 (K) savings plan for 2015, we have determined it should be frozen immediately for the remainder of 2016. The Board of Directors, senior management and leaders in management positions will participate in a 10% reduction in base pay effective March 14th. Additionally, DXP as a whole company will require that we right size the company for our expected sales volume. This is in an effort to reduce labor costs while preserving as many DXPeople as possible in this uncertain economic environment.
We have all taken pay reductions over the last year with some of us taking reductions as high as 50% – 60% (via commission or bonus declines) including senior management. It is unfortunate, but the prolonged oil and gas depression and industrial recession has left us with no other choice but to make these difficult and unwanted moves and decisions.
The fastest and biggest cure to the health of DXP is more sales. Your expectations and mine are that the sales management, sales professionals and everyone else that touches our customers is working smart and diligently as we are all counting on you! DXP has given you some great weapons to be successful with and we are supporting and counting on your efforts to win each order. I am not going to list all the tools you have to win with, you should know what they are and understand how to use them already, but to use the “Hunter” and “Farmer” label you have to do both. “Farm” existing accounts to capture more of each customer wallet/spend and “Hunt” for new customers. We have the customer value propositions to sell and you have the selling skills to succeed.
Over the last several months, we have seen countless companies announce layoffs and in isolated incidents even bankruptcies. I point this out to try and put in context that the oil and gas depression is affecting more than DXP and is further reaching than many would have initially thought when this started over 2 years ago. The decisions we make are about preserving the future of DXP. DXP is a great company that is accustom to winning and we will win again. I can promise you that the leadership team will do all that we can to put us in a position to emerge stronger on the other side while staying true to our values and culture. Thank you for your understanding.
“[F]rom the beginning … his campaign has profited from voter prejudice and hatred” and represents an “authoritarian assault upon democracy.”
If Speaker Paul Ryan wishes to be “on the right side of history … he must condemn Mr. Trump clearly and comprehensively. The same goes for every other Republican leader.”
“Maybe that would split the (Republican) party,” but, “No job is worth the moral stain that would come from embracing (Trump). No party is worth saving at the expense of the country.”
If Republican leaders wish to be regarded as moral, every one of them must renounce Trump, even if it means destroying their party.
Who has laid down this moral mandate? The Holy Father in Rome?
Anticipating the Post’s orders, Sen. Marco Rubio has been painting Trump as a “scam artist” and “con artist,” with an “orange” complexion, a “spray tan” and “tiny hands,” who is “unfit to lead the party of Lincoln and Reagan.”
The establishment is loving Rubio, and the networks are giving him more airtime. And Rubio is reciprocating, promising that, even if defeated in his home state of Florida on March 15, he will drive his pickup across the country warning against the menace of Trump.
Rubio, however, seems not to have detected the moral threat of Trump, until polls showed Rubio being wiped out on Super Tuesday and in real danger of losing Florida.
Before other Republicans submit to the ultimatum of the Post, and of the columnists and commentators pushing a “Never Trump” strategy at the Cleveland convention, they should ask themselves: For whom is it that they will be bringing about party suicide?
That the Beltway elites, whose voice is the Post, hate and fear Trump is not only undeniable, it is understandable.
The Post beat the drums for the endless Mideast wars that bled and near bankrupted the country. Trump will not start another.
The Post welcomes open borders that bring in millions to continue the endless expansion of the welfare state and to change the character of the country we grew up in. Trump will build the wall and repatriate those here illegally.
Trump threatens the trade treaties that enable amoral transnational corporations to ship factories and jobs overseas to produce cheaply abroad and be rid of American employees who are ever demanding better wages and working conditions.
What does the Post care about trade deals that deindustrialize America when the advertising dollars of the big conglomerates are what make Big Media fat and happy?
The political establishment in Washington depends on Wall Street and K Street for PAC money and campaign contributions. Wall Street and K Street depend on the political establishment to protect their right to abandon America for the greener pastures abroad.
Before March 15, when Florida and Ohio vote and the fates of Rubio and Gov. John Kasich are decided, nothing is likely to stop the ferocious infighting of the primaries.
But after March 15, the smoke will have cleared.
If Trump has fallen short of a glide path to the nomination, the war goes on. But if Trump seems to be the near-certain nominee, it will be a time for acceptance, a time for a cease-fire in this bloodiest of civil wars in the GOP.
Otherwise, the party will kick away any chance of keeping Hillary Clinton out of the White House, and perhaps kick away its future as well.
While the depth and rancor of the divisions in the party are apparent, so also is the opportunity. For the turnout in the Republican primaries and caucuses has not only exceeded expectations, it has astonished and awed political observers.
A new “New Majority” has been marching to the polls and voting Republican, a majority unlike any seen since the 49-state landslides of the Nixon and Reagan eras.
If this energy can be maintained, if those throngs of Republican voters can be united in the fall, then the party can hold Congress, capture the While House and reconstitute the Supreme Court.
Come the ides of March, the GOP is going to be in need of its uniters and its statesmen. But today, all Republicans should ask themselves:
Are these folks coming out in droves to vote Republican really the bigoted, hateful and authoritarian people of the Post’s depiction?
Or is this not the same old Post that has poured bile on conservatives for generations now in a panic that America’s destiny may be torn away from it and restored to its rightful owners?
… today it’s Gallup’s turn to point out what has been abundantly clear to all non-economist types, and is the reason why the so-called recovery remains nothing but a myth, namely that “Americans Are Buried Under a Mountain of Debt.”
More from John Gleming:
Americans who don’t have enough to live comfortably carry higher credit card balances
Those who enjoy spending money more than saving money carry more credit card debt
Student loan debt associated with highest level of indebtedness
The amount of debt Americans carry is staggering and grows every day.
A prior article explored the kinds and amounts of consumer debt that Americans carry, other than mortgages. Gallup found that only a subset of Americans carries the bulk of consumer debt. This article examines how consumer debt affects different groups of Americans, especially millennials.
Those Without Enough to Live Comfortably Are Using Credit Cards to Supplement Their Resources
Two-thirds of Americans say they have enough money to live comfortably, with more traditionalists (76%) and baby boomers (67%) saying they do than millennials (62%) and Gen Xers (61%).
Those who say they don’t have enough money to live comfortably appear to be using their credit cards to supplement their available resources with high-interest credit. It seems that though their total consumer debt balances are 17% lower than those of Americans who say that they do have enough money to live comfortably, across all generations except traditionalists, Americans who say that they don’t have enough money to live comfortably carry 36% larger credit card balances than those who say that they do have enough money.
The difference is particularly acute among millennials, where those who say that they don’t have enough money to live comfortably carry three times more credit card debt than those who say they do have enough money. Millennials who say they don’t have enough money to live comfortably also carry more auto loan debt and personal loan debt than millennials who say they do have enough money. Millennials are the only generation where those who say that they don’t have enough money to live comfortably carry 8% more total consumer debt than those who say they do have enough money.
Do Americans Enjoy Saving Money or Spending Money More?
Gallup has been tracking whether Americans enjoy saving money or spending money more since 2001. In 2001, 48% of Americans enjoyed spending money more than saving it. The preference for spending money remained at 48% in 2005 and then began a decline, which accelerated during the Great Recession.
At the height of the Great Recession in 2009, just 39% of Americans enjoyed spending money more than saving it. The low point for a preference to spend came in 2014, when just 35% said they enjoyed spending money more than saving it. In 2015, the spending preference crept back up to 37%. In the current research, 39% of Americans said they enjoy spending money more than saving it, while the remaining 61% enjoy saving money more. Neither of these percentages differs appreciably by generation.
Those who say they enjoy spending money more tend to earn more but also carry more debt.
Among the generations, those who enjoy spending money more includes a higher proportion of those making $48,000 per year or more than does the group of those who prefer saving money, who include a larger share of those making less than $48,000. The average annual income for spenders is just over $78,500, 9% higher than it is for savers at just over $72,000.
The exception is millennials, where the pattern is reversed. Among millennials, savers have a higher proportion of those making $48,000 per year or more than spenders, who have a larger share of those making less than $48,000. Even with this annual income pattern, however, the average annual income of millennial savers is 5% lower than that of millennial spenders.
In general, those who enjoy spending money more carry more credit card debt (81% more), more student loan debt (4% more), more auto loan debt (6% more) and more personal loan debt (37% more) than those who prefer saving it.
Generationally, the only exceptions to this pattern are among Gen Xers and baby boomers. Gen Xers who enjoy spending money more carry less student loan (24% less) and less auto loan debt (11% less) but double the credit card debt (102% more) and significantly more personal loan debt (75% more) than savers. And baby boomers who enjoy spending money more carry significantly less personal debt (23% less) than those who prefer saving it.
Among millennials, those who enjoy spending money more carry more credit card debt (58% more), more student loan debt (23% more), more auto loan debt (26% more) and more personal loan debt (18% more) than millennials who prefer saving.
When Gallup compares the differences in income and total consumer debt between those who enjoy spending money more and those who prefer saving it, Gen Xers, baby boomers and traditionalists who enjoy spending money more carry their income difference in additional consumer debt. In other words, the ratio of the difference in total consumer debt divided by the difference in annual income between these two groups is approximately 1.1-to-1 for members of these generations who enjoy spending money more.
For millennial spenders, however, the ratio is 2.5-to-1. In other words, millennial spenders carry 2.5 times more consumer debt than the difference in their annual income compared with savers.
Student Loan Debt Associated With Highest Level of Indebtedness
Almost four in 10 Americans enjoy spending money more than saving it, and they carry a larger debt load across the board though their annual income is higher than those who enjoy saving more. And even among individuals who say that they do not have enough money to live comfortably, almost one-third (32%) still enjoy spending money more than saving it, even if it means piling on more debt, especially credit card debt. This group has among the highest levels of credit card debt — 60% higher than everyone else.
Student loan debt — though not extremely widespread — is associated with the highest levels of indebtedness for all generations, but especially for millennials. And as the data illustrate, those with student loan debt are also more likely to take out a car loan, adding to their already-large debt burden.
For those with student loans, that debt accounts for an average of 36% of the person’s annual income, the largest percentage among all types of consumer debt. On average, total consumer debt accounts for 37% of annual income — but it accounts for 57% of annual income among those with student loans. This is a staggering percentage when considered against all other personal financial demands, such as mortgage or rent, food, telecommunications (including Internet and cable), insurance, savings and investments, and fuel and auto maintenance, among other expenses. Precious little is left over for discretionary spending, and until only recently, discretionary spending in America had been shrinking.
Except for millennials, those who enjoy spending money more than saving match the difference in their annual income (over savers) with the additional consumer debt they carry (over savers). Millennial spenders, though, carry 2.5 times more debt than their income difference over savers.
These data suggest that a significant portion of every generation is buried under a mountain of several different kinds of consumer debt. Though sizable slices of each generation carry no debt, the sheer magnitude of how much Americans with debt do owe is a cause for concern.
The GOP is no longer monolithically the tough-on-crime party many think of it as being. As the debate rages on over whether or not we’re living through a “libertarian moment,” it’s worth noting that conversations around criminal justice reform are featuring prominently this weekend at the Conservative Political Action Conference (CPAC) in National Harbor, Maryland.
Groups like Right on Crime and Conservatives Concerned About the Death Penalty (CCATDP), once viewed mostly as novelties within the movement, are now fixtures of CPAC. What’s more, they’re making the case for rethinking the party line on criminal justice issues in decidedly conservative terms.
“The first year we got a lot of weird looks,” CCATDP’s advocacy coordinator, Marc Hyden, says. “But since we keep coming back, we’re accepted as just another part of the umbrella of conservatism. Nobody questions whether I’m a conservative or not—I’m talking about pro-life policies, fiscal responsibility, and limited government, and the death penalty just doesn’t work with that.”
Right on Crime Deputy Director Derek Cohen also has a playbook for reaching his fellow conservatives—and different messages work for different groups, he says. When talking to fiscal conservatives, he likes to point out that the same government that runs the post office runs the prison system. “Not exactly a model of efficiency,” he says. In Texas, where Right on Crime is based, a move toward giving low-level offenders probation or parole instead of prison time has allowed the state to forgo spending $2 billion on new prison infrastructure.
Social conservatives, on the other hand, “tend to appreciate the human value” and the “redemptive quality” of in-facility programs that help people—including people who have made serious mistakes—better themselves. “Even for serious crimes, even for violent crimes, when we send someone away for a long time, their life is fundamentally altered,” Cohen says. “That could be altered for the better, but that’s only if we’re putting in the rehabilitational elements that reduce recidivism.”
He conjures the example of a father and husband who gets caught with a little bit of heroine. His prison sentence under the old scheme would likely be just long enough to cause him to lose his job and experience problems at home. For social conservatives genuinely nervous about the decline of the family, that’s clearly a sub-optimal outcome. If instead people like that get intensive probation, “they’re at work. They’re at their kids’ ballgames.”
There’s some evidence policy is moving in tandem with the increased support among conservatives. Houston’s district attorney recently introduced guidelines whereby most first-time low-level drug offenders are diverted into community programs instead of locked up, for example.
We’re seeing progress on capital punishment as well. Just yesterday Florida’s legislature passed an overhaul to make it less likely that offenders will end up on death row. On the same day a judge ruled that Alabama’s execution system, like Florida’s before it, is unconstitutional. Last year Nebraska abolished its death penalty, and on Wednesday of this week the Utah state senate voted to do the same. “Now it’s heading over to the [Nebraska state] House,” Hyden says, “and the speaker of the House is against the death penalty! So we may get another red state to repeal the death penalty, which proves that Nebraska wasn’t an anomaly.”
The piecemeal nature of these victories can also be used to appeal to conservatives, he says. “I look at it through a Tenth Amendment framework—change should be done at the state level. If it’s not expressly mentioned in the Constitution, it should be done by the states.”
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Reason TV caught up with CCATDP’s Hyden at CPAC last year. See what he had to say below.