Tag: finance

Climbing above the poverty line has become more daunting in recent years. NY Times reports that the composition of the nation’s low-wage work force has been transformed by the Great Recession, shifting demographics and other factors.

 

Via NYTimes,

More than half of those who make $9 or less an hour are 25 or older, while the proportion who are teenagers has declined to just 17 percent from 28 percent in 2000, after adjusting for inflation, according to Janelle Jones and John Schmitt of the Center for Economic Policy Research.

 

Today’s low-wage workers are also more educated, with 41 percent having at least some college, up from 29 percent in 2000. “Minimum-wage and low-wage workers are older and more educated than 10 or 20 years ago, yet they’re making wages below where they were 10 or 20 years ago after inflation,” said Mr. Schmitt, senior economist at the research center.

 

"If you look back several decades, workers near the minimum wage were more likely to be teenagers — that’s the stereotype people had. It’s definitely not accurate anymore.”

Read more personal stories of the "recovery" here.

via Zero Hedge http://ift.tt/1eS9aU1 Tyler Durden

Since 2007, the world’s Central Banks have collectively put more than $10 trillion into the financial system since 2008. To put that number into perspective, it’s equal to roughly 15% of global GDP.

 

This kind of money printing is literally unheard of in modern history. And it has set the stage for a roaring wave of inflation to hit the financial system. Indeed, the first signs are already showing up… not in the “official” Government data (which is bogus) but in how those who run businesses around the globe are acting.

 

Most people believe that when inflation hits, prices have to go higher. This is true, but higher prices can be manifested in multiple ways. Firms usually do not simply raise prices in nominal terms as price elasticity can kill revenues because it would hurt sales.

 

Instead, companies resort to a number of strategies to maintain profit margins without hurting their sales. One of them is to simply leave part of a package EMPTY, thereby selling LESS product for the SAME price (a hidden price hike).

 

Food manufacturers, like the politicians currently debating health reform, may have a solution to the obesity crisis: Feed Americans a lot of hot air. But this heated air is not just a figure of speech for packaged goods companies including Ralcorp Holdings' (RAH) Post Foods and PepsiCo (PEP) subsidiaries Frito-Lay and Quaker.

 

In many packaged products, as much as 50% of the contents is just empty space, an investigation by Consumer Reports reveals. And we consumers are buying that nothingness every day.

 

http://ift.tt/1cNOxut

 

Another tactic corporation use is to simply sell smaller packages for the SAME price (another means of selling less for MORE= a price hike).

 

U.S. Companies Shrink Packages as Food Prices Rise

           

Large food companies have recently announced that they will raise the prices they charge grocery retailers for commodities-based products. For example, a chocolate bar will cost more soon: Hershey last week announced a 10% increase for most of its confectionery goods.

 

Of course, straightforward price hikes could cause consumers to buy less of those products or to choose less costly store brands. So in many cases, food companies are trying a different tactic: Keeping the price of an item the same while decreasing the amount of food in the package. The company recoups the costs of the rise in commodities and hopes consumers don't notice that they're getting less of the product for the same price.

 

http://ift.tt/1cNOvCK

 

However, perhaps the most scandalous policy employed by companies looking to engage in stealth price hikes is to swap out higher quality ingredients for lower quality/ lower cost alternatives. One bigname coffee maker was caught doing this just a few years ago.

 

Reuters is reporting that many of America's major brands have been quietly tweaking their coffee blends. While most coffee companies consider their blends trade secrets, and are loath to disclose exactly what goes into them, both circumstantial and direct evidence suggests they're now substituting lower-grade Robusta beans for some of their pricier Arabica, and degrading the quality of our coffee…

 

At least one coffee roaster has admitted it. In November, Massimo Zanetti USA, which roasts for both Chock full o'Nuts and Hills Bros., publicly confirmed upping its Robusta usage by 25% this year.

 

Why the switcheroo? Prepare to not be shocked. The answer is: price.

 

Last year, a shortage of Arabica caused prices of the premium bean to spike as high as $3 a pound — $2 more than what a pound of Robusta would cost. This compares to a five-year historical trend of Arabica costing closer to 70 cents more than Robusta. In recent weeks, the trend has reversed, with Arabica prices falling to just a 62-cent premium over Robusta.

 

http://ift.tt/RAgFIl

 

In simple terms, inflation is already around us, though it’s not yet showing up in LITERAL price hikes. Instead, we’re all paying MORE for LESS. And this won’t show up in the official numbers for some time.

 

For a FREE Special Report on how to protect your portfolio from inflation, swing by

http://ift.tt/RQfggo

 

Best Regards

Phoenix Capital Research

 

via Zero Hedge http://ift.tt/OwSA63 Phoenix Capital Research

With the ink still wet on the referendum vote slips and the Duma’s agreement to accept Crimea into Mother Russia, the Crimean Mint (since we pre-suppose there is one) has wasted no time in creating the new coinage for the nation. As Crimea transitions quickly to the Russian Ruble, they have created their own “Crimea-styled” currency… perhaps to be named the ‘cruble’?

 

 

h/t @abunin

via Zero Hedge http://ift.tt/1hBr27V Tyler Durden

The one problem with every Ponzi scheme is that it must constantly grow, in both demand and supply terms, for the mass delusion to continue. The other problem, of course, is that every Ponzi scheme always comes to an end…. which may have just happened in China where as the chart below shows, as of this moment at least, the supply side to the Chinese housing ponzi (and recall that in China the bubble is not in the stock market like in the US, but in housing) has slammed shut.

via Zero Hedge http://ift.tt/1hBiTAg Tyler Durden

Back in 2013 it was Syria where the world was gearing for imminent military action after a relentless series of false flag provocations by the United States (intent on securing a Qatar gas pipeline to Europe) which in the last minute was deftly diffused by Vladimir Putin. In 2014, it was the Ukraine’s turn, and after a prolonged campaign orchestrated by Victoria Nuland and the US State Department (again) which succeeded in the now traditional violent coup (see Egypt and Libya), once again saw Putin victorious, after yesterday’s annexation of the all important Crimean peninsula, achieved without the firing of one shot. So now that Putin has succeeded in trouncing the US twice in a row, it is time to poke some old, well-known geopolitical wounds, such as Iran. And who better to do it than Israel, where as Haaretz reports, “Prime Minister Benjamin Netanyahu and Defense Minister Moshe Ya’alon have ordered the army to continue preparing for a possible military strike on Iran’s nuclear facilities at a cost of at least 10 billion shekels ($2.89 billion) this year, despite the talks between Iran and the West, according to recent statements by senior military officers.”

To be sure there is a tangible benefit for all those involved: moar war means more military spending means more “broken windows” means more “GDP.”

Three Knesset members who were present at Knesset joint committee hearings on Israel Defense Forces plans that were held in January and February say they learned during the hearings that 10 billion shekels to 12 billion shekels of the defense budget would be allocated this year for preparations for a strike on Iran, approximately the same amount that was allocated in 2013.

Yet unlike the US where warmongering has become an art, if not a science, in Israel these things are taken far more seriously:

The IDF representatives said the army had received a clear directive from government officials from the political echelon – meaning Netanyahu and Ya’alon – to continue readying for a possible independent strike by Israel on the Iranian nuclear sites, regardless of the talks now happening between Iran and the West, the three MKs said.

As for the diplomatic cover for a potential attack, it is well-known, and the same one used for the past 3 years – attack Iran before it can nuke Israel and obliterate it from the face of the earth.

Ever since the interim accord between Iran and the six powers was reached, Netanyahu has stressed that Israel will not consider itself bound by it. In the last few weeks, as talks on a permanent accord have resumed, Netanyahu has upped his rhetoric on the Iranian issue, and is again making implied threats about a possible unilateral Israeli strike on the Iranian nuclear sites.

 

“My friends, I believe that letting Iran enrich uranium would open up the floodgates,” Netanyahu said at the AIPAC conference earlier this month. “That must not happen. And we will make sure it does not happen.”

Ironically, this time Israel may see pushback from none other than the US itself, which mysteriously over the past 6 months has transformed itself from Iran’s most hated enemy to a willing partner who sees Iran as nothing short of a frontier market (not to mention source of natural resources).

However, the US too realizes that it needs “military outs” with Ukraine seemingly diffused for the time being. Which is why yesterday, a few hours after Russia peacefully annexed Crimea, the US made its feeble response known, when it suspended operations of the Syrian Embassy in Washington and its consulates and told diplomats and staff who are not U.S. citizens or permanent residents to leave the country. The justification of this oddly timed move came from the U.S. special envoy for Syria Daniel Rubinstein who said that Syrian President Bashar al-Assad had refused to step down and was responsible for atrocities against Syrians.

And this was news to the US? More from Reuters:

“We have determined it is unacceptable for individuals appointed by that regime to conduct diplomatic or consular operations in the United States,” said Rubinstein, whose appointment was announced by the State Department on Monday.

 

“Consequently, the United States notified the Syrian government today that it must immediately suspend operations of its embassy in Washington, D.C., and its honorary consulates in Troy, Michigan, and Houston, Texas,” he said in a statement.

In other words, the US tried to impose its “moral superiority” codex on yet another country, which for all intents and purposes was a proxy of Russian strength in the middle east, i.e., punish the Kremlin by kicking out Syria. Surely Putin was in tears.

The only problem is that it is now beyond obvious to virtually everyone in the world that the framework of Pax Americana is only applicable to the increasingly self-deluded United States, and of course the Group of 7 most insolvent nations, whose debt ponzi schemes are ever more reliant on a centrally planned regime of low interest rates and free money. For everyone else it is now just as obvious that when provoked, the best the US can do is simply impose some sanctions, and shut down embassies… while it prints trillions of dollars in “paper wealth” each year of course.

via Zero Hedge http://ift.tt/1ou1nSP Tyler Durden

U.S. Senator John McCain (R-AZ) released the following statement on the need to provide greater support to Ukraine and impose additional costs on Russia in the wake of the Russian government’s annexation of Crimea today… clearly seeking the diplomatic way out…

 

Statement by Senator John McCain on Ukraine

“In response to the Russian government’s annexation of Crimea today, the United States should provide greater support to Ukraine and impose additional costs on Russia, including:

1. “Pass the bipartisan legislation that the Senate Foreign Relations Committee approved last week, which authorizes $1 billion in loan guarantees for Ukraine, democracy and security assistance for Ukraine, targeted sanctions against Russian officials, and steps to strengthen the IMF’s ability to be a stronger partner to Ukraine.
2. “Work with NATO to rush plane-loads of food and other humanitarian assistance to Ukrainian soldiers and civilians in eastern Ukraine.
3. “Work through the OSCE to approve and deploy a large civilian monitoring mission in eastern Ukraine that could help set the record straight about alleged threats to ethnic Russians and reveal Putin’s effort to inflame the situation as a pretext for further aggression.
4. “Rush the modest military assistance to the Ukrainian government that its leaders have requested, including some small arms and ammunition, as well as significant non-lethal assistance, such as protective equipment, spare parts, fuel, and sharing of intelligence.
5. “Work with NATO and other partners to support the Ukrainian government in designing and resourcing a long-term assistance program to rebuild and reform Ukraine’s military.
6. “Enhance NATO’s force presence, security cooperation, and military exercises, especially in Central and Eastern Europe and the Baltic countries.
7. “Work within NATO to take all necessary steps that can prepare for the expansion of the alliance to include countries such as Georgia and Montenegro as soon as possible.
8. “Expand significantly the U.S. and E.U. targeted sanctions against the most corrupt Russian government officials, companies, and financial institutions.
9. “Use the Magnitsky Act to sanction additional Russian officials for their gross violations of human rights.
10. “Take more assertive steps to isolate Russia internationally, including by repeated votes in the U.N. Security Council and a G-7 boycott of the G-8 Summit in Sochi.
11. “Take steps to permit and enhance the exportation of U.S. oil and natural gas, especially to NATO allies and other European partners, in order to decrease Europe’s reliance on Russian supplies of energy.

“The United States and our allies and partners must remain committed to supporting the sovereignty, independence, and territorial integrity of Ukraine, which includes Crimea.”

 

Seems like lots of spending, not much talking, and a whole lot that will set in place retaliation…

via Zero Hedge http://ift.tt/1j3lGaO Tyler Durden

From Sean Corrigan of Diapason Commodities Management

BOE’s View On Money Creation

Of late there has been much breathless wonder expressed at the Bank of England’s supposedly ground-breaking release. ‘Money in the Modern Economy’, in which it argues – shock! horror! – that banks do not lend out previously received deposits, but that they create the latter ex nihilo by first making loans. Alas, as Gunnar Myrdal waspishly observed of Keynes himself, this has been a reaction plagued with the ‘unnecessary originality’ of those who don’t know their literature.

As an example, some few months ago, I had an exchange with the disputatious George Selgin (he of the perfervid fractional free banking bent) in which I cited – after a good twenty minutes’ research – the following authorities to that very same effect:-

Roepke from a footnote (p113) to his 1936 work, ‘Crises & Cycles’:

The process [of credit creation] is now clearly explained in any text-book on economics, banking or money (especially recommendable is Hartley Withers’ Meaning of Money). A fuller treatment may be found in the following books: R. G. Hawtrey, op. cit.; J. M. Keynes, A Treatise on Money, pp. 23-49 : C. A. Philips, Bank Credit, New York, 1920; W. F. Crick, “The Genesis of Bank Deposits,” Economica, June 1927, and F. A. von Hayek, Monetary Theory and the Trade Cycle, London,1933.

 

Without an understanding of this process and of its limitations, no real insight into the working of our banking system and, consequently, of our entire economic system seems possible, to say nothing of the mechanism of business cycles. There may still be many people who can no more believe the story of the genesis of bank money than they can believe the genesis of the Bible, but on the whole it now seems to be generally accepted. A last but hopeless attempt at disproving it has recently been made by M. Bouniatian, Credit et conjoncture, Paris, 1933. [Emphasis mine and apparently NOT the last!]

Or as Hayek indeed noted in ‘Prices and Production’ above his own lengthy footnote (pp 81-2):

The main reason for the existing confusion with regard to the creation of deposits is to be found in the lack of any distinction between the possibilities open to a single bank and those open to the banking system as a whole.

Shall we hear from Mises?  ‘Monetary Stabilization and Cyclical Policy’ (p105) seems pretty unequivocal on the matter:-

If the banks grant circulation credit by discounting a three month bill of exchange, they exchange a future good—a claim payable in three months—for a present good that they produce out of nothing. It is not correct, therefore, to maintain that it is immaterial whether the bill of exchange is discounted by a bank of issue or whether it remains in circulation, passing from hand to hand. Whoever takes the bill of exchange in trade can do so only if he has the resources. But the bank of issue discounts by creating the necessary funds and putting them into circulation. [which, incidentally, is an almost exact paraphrase of the argument I advanced and to which you took such exception, George]

Finally, let us allow Dennis Robertson a few words on the matter from the posthumous collection ‘Essays in Money and Interest’, p25:

…bank money comes into existence mainly as the result of loans and investments made in the banking system… … Historically, there seems to me no question that the bulk of bank money in existence has come into existence in this way… If anyone retains any lingering doubts on this matter, whether these doubts arise from consideration of the multiplicity of banks or from some less rational cause, I commend to him the patient and careful article of Mr. Crick [see above]… Here time forces me to treat this particular controversy as closed. [Emphasis mine again]

Since when I have found an even more waspish dismissal of the dullards who hold the contrary view from the inimitable Fritz Machlup, from an early 70s discussion of the development of the Eurodollar market:

 

There is a wider significance to this long-held misapprehension. Namely, that Keynes – so enamoured of his circular flow visualisation of the economy and yet also so prone to the confusion of mere snapshot accounting identities with dynamic and causative  phenomena – also held that banks were simple, passive intermediaries in the system and could therefore safely be shorn of having any true role to play in the determination of financial variables. Having similarly insisted that saving and investment MUST be equal (accounting v causation, again), he was thus left with nothing by which to determine the rate of interest and so opted for his ludicrous ‘liquidity preference’ idea that the rate of interest is a bribe by means of which to discourage the common man’s economy-sapping fetish for hoarding money.

From there, it was but a short step to the vilification of savers as the enemies of public well being and – via the further idiocy of the ‘liquidity trap’ with which this seemed perennially to threaten us – to the evils inherent in the incessantly inflationary ravings of the likes of Paul Krugman and all the other bien pensants of his stripe. 

via Zero Hedge http://ift.tt/1hAZrUg Tyler Durden

While Ukraine’s leaders have on one side threatened retaliation and will not stand for Russia’s annexation of Crimea, they have also suggested that they should be compensated for the loss of the region. However, the latest headlines from Interfax suggest that the Ukraine government has to some degree given up hope…

• *UKRAINE GOVT ADOPTS PLAN TO EVACUATE CITIZENS FROM CRIMEA: IFX
• *UKRAINE TO SETTLE CRIMEAN CITIZENS ELSEWHERE IN COUNTRY: IFX

While no details are known on the timing – or whether this includes the military – it certainly appears like Ukraine has ceded the region to Russia (leaving it tough for western sanctions to achieve anything now).

via Zero Hedge http://ift.tt/1cZxPuM Tyler Durden

As we explained in great detail yesterday, the selling in commodities is far from over. The extent of China’s commodity-backed-financing is only now beginning to be understood and forced sales (along with the vicious circle of collapsing collateral values and increasingly tightening credit) are hard to stop for a government set of reform. Copper prices were heavy overnight in Asia but this morning has seen futures plunge on heavy volume below $289 – the lowest since July 2009– breaking key support levels. For the same reasoning, zinc and aluminum are under pressure, as is steel rebar and gold.

 

 

Which has dropped copper prices to 5-year lows…(breaking critical support)

via Zero Hedge http://ift.tt/1gP7V8s Tyler Durden