Tag: news

It’s a double-whammy for the U.S. taxpayer. Bloomberg notes that not only are many Americans writing yet another check to Uncle Sam this tax season, they’re also paying more to have someone handle their returns. The Labor Department’s consumer-price index for tax return preparation rose 2.4 percent, the third-biggest monthly gain ever, to a record in March.

Such trends show why firms like Intuit Inc., the maker of TurboTax, and H&R Block Inc., have spent millions of dollars lobbying Congress to limit efforts to simplify the tax-filing process.

But it gets worse, as Andrew Napolitano writes via The Mises Institute; with a tax code that exceeds 72,000 pages in length and consumes more than six billion person hours per year to determine taxpayers’ taxable income, with an IRS that has become a feared law unto itself, and with a government that continues to extract more wealth from every taxpaying American every year, is it any wonder that April 15th is a day of dread in America?

Social Security taxes and income taxes have dogged us all since their institution during the last century, and few politicians have been willing to address these ploys for what they are: theft.

During the 2012 election, then-Texas Gov. Rick Perry caused a firestorm among big-government types during the Republican presidential primaries last year when he called Social Security a Ponzi scheme. He was right. It’s been a scam from its inception, and it’s still a scam today.

When Social Security was established in 1935, it was intended to provide minimal financial assistance to those too old to work. It was also intended to cause voters to become dependent on Franklin Delano Roosevelt’s Democrats. FDR copied the idea from a system established in Italy by Mussolini. The plan was to have certain workers and their employers make small contributions to a fund that would be held in trust for the workers by the government. At the time, the average life expectancy of Americans was 61 years of age, but Social Security didn’t kick in until age 65. Thus, the system was geared to take money from the average American worker that he would never see returned.

Over time, life expectancy grew and surpassed 65, the so-called trust fund was raided and spent, and the system was paying out more money than it was taking in – just like a Ponzi scheme. FDR called Social Security an insurance policy. In reality, it has become forced savings. However, the custodian of the funds – Congress – has stolen the savings and spent it. And the value of the savings has been diminished by inflation.

Today, the best one can hope to receive from Social Security is dollars with the buying power of 75 cents for every dollar contributed. That makes Social Security worse than a Ponzi scheme. You can get out of a Ponzi investment. You can’t get out of Social Security. Who would stay with a bank that returned only 75 percent of one’s savings?

The Constitution doesn’t permit the feds to steal your money. But steal, the feds do.

Also in 2012, during a Republican presidential debate, a young man asked the moderator to pose the following question to the candidates: “If I earn a dollar, how much of it am I entitled to keep?” The question was passed to one of the candidates, who punted, and then the moderator changed the topic. Only Congressman Ron Paul gave a serious post-debate answer to the young man’s question: “All of it.”

Every official foundational government document – from the Declaration of Independence to the U.S. Constitution to the oaths that everyone who works for the government takes – indicates that the government exists to work for us. The Declaration even proclaims that the government receives all of its powers from the consent of the governed. If you believe all this, as I do, then just as we don’t have the power to take our neighbor’s property and distribute it against his will, we lack the ability to give that power to the government. Stated differently, just as you lack the moral and legal ability to take my property, you cannot authorize the government to do so.

Here’s an example you’ve heard before. You’re sitting at home at night, and there’s a knock at the door. You open the door, and a guy with a gun pointed at you says: “Give me your money. I want to give it away to the less fortunate.” You think he’s dangerous and crazy, so you call the police. Then you find out he is the police, there to collect your taxes.

The framers of the Constitution understood this. For 150 years, the federal government was run by user fees and sales of government land and assessments to the states for services rendered. It rejected the Hamiltonian view that the feds could take whatever they wanted, and it followed the Jeffersonian first principle that the only moral commercial exchanges are those that are fully voluntary.

This worked well until the progressives took over the government in the first decade of the 20th century. They persuaded enough Americans to cause their state legislatures to ratify the Sixteenth Amendment, which was designed to tax the rich and redistribute wealth. They promised the American public that the income tax would never exceed 3 percent of income and would only apply to the top 3 percent of earners. How wrong – or deceptive – they were.

Yet, the imposition of a federal income tax is more than just taking from those who work and earn and giving to those who don’t. And it is more than just a spigot to fill the federal trough. At its base, it is a terrifying presumption. It presumes that we don’t really own our property. It accepts the Marxist notion that the state owns all the property and the state permits us to keep and use whatever it needs us to have so we won’t riot in the streets. And then it steals and uses whatever it can politically get away with. Do you believe this?

There are only three ways to acquire wealth in a free society. The inheritance model occurs when someone gives you wealth. The economic model occurs when you trade a skill, a talent, an asset, knowledge, sweat, energy or creativity to a willing buyer. And the mafia model occurs when a guy with a gun says: “Give me your money or else.”

Which model does the government use? Why do we put up with this?

via http://ift.tt/2oGtrsV Tyler Durden

While happy campaign rhetoric made it sound like building a 2,000 foot wall along the U.S. southern border would be a walk in the park, in reality, much like repealing and replacing Obamacare and/or passing meaningful tax reform, various regulatory and other hurdles could tie up the project for years.

One such issue that threatens the viability of Trump’s ‘beautiful’ border wall stems from the fact that most of the southern border of Texas is owned by private individuals which means the U.S. government will have to take 100s landowners to court to exert its power of eminent domain.  Moreover, as NBC points out, some folks live so close to the Rio Grand River that they may end up on the ‘Mexican side’ of the wall.  Of course, these landowner fights could provide all the leverage needed for liberal lawyers to hold up the border wall construction forever, or at least until Trump gets voted out of office.

When the U.S. government built the fence, it had to take hundreds of landowners to court to use its power of eminent domain. That’s because unlike in other southern border states, most Texas border land is privately owned, and tough terrain and water use agreements with Mexico meant some fence was built a mile or more north of the river.

 

With court fights also expected over Trump’s wall, the Texas Civil Rights Project has begun signing up landowners and identifying people who might be affected.

 

Under the U.S. Constitution, the government must prove it wants to seize land for public use and must offer a landowner “just compensation.” While challenging the wall’s “public use” would be difficult, those who believe they’re not getting the full value of their land could take the case to court, setting up trials that could take years.

 

Even if they don’t win, lawyers hope to tie up the wall in court long enough that politics could effectively stop it, either in Congress or after another election.

“That’s a fight that we’ve been ready to fight,” said Efren Olivares, a lawyer with the Texas Civil Rights Project.

 

Of course, when it comes to conservatives in Texas, almost nothing draws more ire from voters than the idea of stripping them of their private property rights through the assertion of eminent domain.  Moreover, in this specific instance, those voters will find unlikely support from any number of liberal organizations who will be all too willing to fund their legal costs to fight Trump and his wall.

In San Benito, Eloisa Tamez spent seven years trying to stop the government from running the fence through her property, which had been in her family since the 1700s. The government eventually won, but only after agreeing to pay about $56,000, many times what it initially offered. She uses a gate to access the part of her property that’s on the other side of the fence.

 

Now, she’s preparing for the possibility of another court battle.

 

“I probably have one more decade to live, and I had one decade of torture,” said Tamez, 82. “I think if they start that business again, I don’t know how much fight I’ll have left in me, but I’m going to fight it until the end.”

Something tells us that yet another Trump initiative just got demoted from a ‘near certainty’ to a ‘maybe’…right along with healthcare and tax reform.

via http://ift.tt/2oGbQ4i Tyler Durden

In response to the US vice president, Russia’s foreign minister Sergey Lavrov said that Mike Pence’s statement on the US running out of “strategic patience”
towards Pyongyang does not contribute to resolving the crisis. The top Russian diplomat also voiced hope there will be no repeat of the US strike on Syria in North Korea.

On Monday, speaking from the DMZ, Mike Pence said the world has witnessed the “strength and resolve of Trump in actions taken in Syria and Afghanistan,” and threatened North Korea “not to test” this resolve or “or the strength of the armed forces of the United States.”

Lavrov responded by saying “I hope that there won’t be any unilateral actions like we recently saw in Syria and that the US will follow the policies Trump repeatedly declared during his election campaign.” He also warned the US not to take any military actions, stressing that the “risky nuclear and missile endeavors of Pyongyang” violating UNSC resolutions could not be used as an excuse for violating international law and the UN Charter “in the same fashion” as in Syria.

The period of US policy before the current escalation could be hardly described as an “era of strategic patience,” Lavrov added.

“I cannot call the Obama administration’s period an ‘era of strategic patience,’ as the US has been quite harshly limiting North Korea’s capabilities to develop economy sectors related to nuclear or energy areas,” Lavrov said, referring to past US initiatives, many of them backed by the UN Security Council.

Also addressing the matter, Kremlin spokesman Dmitry Peskov said that harsh statements do not contribute to peace and stability in the region, while commenting on South Korean President Hwang Kyo-ahn’s promise to “implement intensive punitive measures” on Pyongyang in case of any “provocations.”

“Our position is well known and consistent. We call on all sides to avoid any actions which might be perceived as a provocation. And we stand for the continuation of coordinated international efforts in existing formats to resolve the North Korean problem,” Peskov said.

Meanwhile tensions on the Korean Peninsula remain high: after Pyongyang conducted a missile test amid joint US-South Korea drills in March, and with at least one and as many as 3 US aircraft carrier groups headed toward the Peninsula, today North Korea’s UN ambassador said the US has “created a dangerous situation in which the thermonuclear war may break out at any moment on the peninsula and pose a serious threat to the world’s peace and security, to say nothing of those of northeast Asia.” Separately, North Korea told the BBC that the country would be “conducting more missile tests on a weekly, monthly and yearly basis,” in effect assuring a provocation.

Judging by the market’s response on Monday, a global thermonuclear war would be just the catalyst to pust the S&P back over its all time high of 2,400.

via http://ift.tt/2oQurfZ Tyler Durden

Authored by Mike Krieger via Liberty Blitzkrieg blog,

When you want to see what U.S. deep state propagandists are up to, all you have to do is take a glance at what meme corporate media happens to be pushing any given week. It’s been almost a decade since I started observing and analyzing the corporate press on a daily basis, and I can now say unequivocally that the quality of American imperial propaganda has gone completely down the crapper.

The believability of some of the stuff being pushed these days defies all logic and is easily dispelled with an ounce of critical thought, yet there it is, in our face on a daily basis almost taunting the intelligence of the U.S. population. Indeed, it appears the current strategy is no more sophisticated that proclaiming any and all dissent as being the result of “Russia operations.” This is done to prevent any actual debate on subjects of grave national importance since the U.S. government knows its claims don’t hold up to any real scrutiny. Why look into the veracity of a deep state claim when we can just dismiss alternative viewpoints as “Russian operations.”

To see what I mean, take a look at some excerpts from a recent article published by ABC News, Behind #SyriaHoax and the Russian Propaganda Onslaught:

As Syrian president Bashar al-Assad called videos of last week’s chemical attack a “fabrication,” a piece of propaganda promoted by a Russian cyber operation and bearing the hashtag #SyriaHoax has gained traction in the United States, analysts tell ABC News.

 

Following the chemical weapons attack that killed dozens of civilians on Tuesday, Al-Masdar News, a pro-Assad website based in Beirut, published claims that “something is not adding up in [the] Idlib chemical weapons attack.” Its author cited “holes” in the accounts provided by the “Al-Qaeda affiliated” White Helmets leading to the conclusion that “this is another false chemical attack allegation made against the government.”

 

That hoax story was promoted by a network of Russian social media accounts and ultimately picked up by popular alt-right personalities in the United States, including Mike Cernovich, one of the leading voices in the debunked ‘Pizzagate’ conspiracy theory. Cernovich popularized its new hashtag — #SyriaHoax — and sent it soaring through cyberspace. According to Trends24, within hours of the retaliatory missile strike President Donald Trump launched on Thursday night, #SyriaHoax was the No. 1 trending Twitter topic in the United States.

There are a few things I want to highlight when it comes to these first three paragraphs. First, anyone paying the slightest amount of attention to what’s happening in the world would have immediately and independently questioned why Assad would launch a chemical attack guaranteed to lead to widespread international condemnation at the very moment he was most secure in his own position. No “Russian operation” needed to recognize Assad’s total lack of motive. Indeed, two of America’s more respectable former Congressmen, Ron Paul and Dennis Kucinich both questioned the ridiculous deep state Syria narrative.

Moreover, the reason corporate media needs to call #SyriaHoax a Russian operation is because it became the No. 1 trending topic in America. The public can’t be allowed to think this train of thought represents actual grassroots thinking (which it does), because that would imply that trust in the status quo is evaporating rapidly and uncontrollably (it is).

Now here’s the very next paragraph of the article.

J.M. Berger of The International Centre for Counter-Terrorism at The Hague, who studies propaganda and social media analytical techniques, said #SyriaHoax is “a clear example of a Russian influence campaign” designed to undermine the credibility of the U.S. government.

This is pure comedy. As if the U.S. government needs Russia to “undermine its credibility.” It does a perfectly good job of doing that all on its own. Was Russia responsible for bailing out Wall Street and funneling trillions to financial criminals, thus propelling the nation into a new Gilded Age where a handful of oligarchs steal everything with impunity while the rest of the country drowns? Didn’t think so.

It’s all very reminiscent to how the pathetic Democratic establishment responded to Hillary Clinton’s loss. Rather than admitting she was a horrible candidate who ran a delusional campaign, theyers merely deflected criticism to Russia, James Comey, Bernie Bros, etc. It’s been a very embarrassing public strategy, and the deep state is now resorting to the exact same strategy through its corporate media parrots. All dissent is a Russian operation. Anything bad that happens to America has nothing to do with our corrupt, clownish leadership, but is Putin’s fault. This is where all of this is going, and it’s further evidence that the American empire has entered a much more pronounced and dangerous period of decline.

From a personal perspective, I know for a fact that the corporate media has a very specific narrative to falsely categorize anyone who questions the status quo as a Russian operative, because it happened to me via The Washington Post. As I noted in the piece, Liberty Blitzkrieg Included on Washington Post Highlighted Hit List of “Russian Propaganda” Websites:

Let’s take Liberty Blitzkrieg for example. Despite the fact that my site is mentioned on “the list,” nobody from PropOrNot bothered to contact me while doing their “research.” They could’ve asked very simple questions about how the site is run, who owns it, and who makes decisions about editorial content. Furthermore, I doubt they did any such research with regard to any of the mentioned sites before slandering them.

 

Since they failed to do any real work, let me answer several of these questions. I, Michael Krieger, am the 100% owner of Liberty Blitzkrieg. I am the only person who makes decisions on what to publish and when. I have absolutely no connections, financial or otherwise, to the Russian government, Russian interests, or the interests of any other government or government related group. Moreover, there is simply nobody on planet earth who has any influence on what I write or what I publish. I left a very successful and financially lucrative job to do what I do now because my passions and ethical grounding pushed me in this direction. If I was interested in making enormous sums of money, I could’ve easily stayed on Wall Street.

 

Moreover, I rarely write about Russia, with the exception of trying to prevent insane neocons and neoliberals in our government from actively seeking a military confrontation, because I — like most normal human beings — would prefer not to contribute to the manifestation of World War 3. Likewise, I try to prevent war breaking out in all circumstances where I think it can and should be avoided. I intentionally almost never use RT as a source, and I’ve never quoted anything from Sputnik. Unlike The Washington Post, I try to be extremely diligent about not publishing fake news, but I am a very strong critic of U.S. government policy, because much of U.S. government policy is certifiably insane and unethical. You can disagree with my opinion on that all you’d like, but I challenge anyone to find anything that could reasonably be considered pro-Russia propaganda on my website. If Liberty Blitzkrieg really is a Russian propaganda site, this should be easy to do since I’ve published thousands of articles over the years.

I have yet to receive an apology from The Washington Post for the lies it shamelessly promoted, but I digress.

Perhaps most importantly, the U.S. deep state is increasingly losing the very people it depends on to sustain even the slightest degree of public credibility. I’m one example. Born in the belly of the financial beast of New York City, I was raised privileged, went to the right schools, graduated from a top university and launched my Wall Street career at the age of 22. Ten years later, I was earning a stupid amount of money for adding absolutely nothing to society, but the response from the powers that be to the financial crisis was so grotesque and unethical I could no longer in good faith continue my career. This isn’t the sort of thing that’s supposed to happen. People like me are supposed to stay loyal to the system for life due to the rewards the system bestows upon us. The fact that someone like me became opposed to a system that was so personally lucrative should be seen as a red flag for those in power. If it happened to me, it’s happened to countless others.

Due to my upbringing and career on Wall Street, many of my close friends are from a socioeconomic class that should be deeply loyal to the power structure. The big secret is that they aren’t. Sure, many of them are forced to work in jobs and industries they despise due to familiar obligations and responsibilities, but don’t mistake this for faith or trust in the status quo. The vast majority of people I know fully understand that the U.S. system is a corrupt cesspool of shifty operators and rent-seeking scamsters. While they may need to play the game to survive and protect their families, they have no loyalty to or trust in the current paradigm and that will ultimately be very important. Multiple people told me that The Washington Post’s slandering of my website was a huge wakeup call for them, which highlighted just how dishonest the corporate press has become.

My theory is that the U.S. has entered a more dangerous period of late-stage imperial collapse. Donald Trump was elected by many to reverse this course, but with his recent pivot away from domestic concerns to focus on war, he’ll likely preside over a dramatic and chaotic period of decline. When this happens, all sorts of people will come out of the woodwork, and you’ll see very quickly how little support the deep state actually has amongst the populace. This period will be frightening to witness, but it’s also a necessary evil.

We must harness the opportunity and replace the corrupt, warmongering, Wall Street controlled dead-end culture and economy with a new paradigm after the old one crashes and burns, which it undoubtably will.

via http://ift.tt/2pLznjI Tyler Durden

By Wolf Richter, originally published on WOLFSTREET.com

Prices of collector cars fell again, according to the April report by Hagerty, which specializes in insuring vintage automobiles. After a tremendous price surge that peaked in 2015, they’ve been ratcheting their way down ever so slowly. But it adds up after a while.

The “Hagerty Market Rating Index” – which tracks the “heat” of the market – fell 0.33 points to 66.65 in April. The index, which is adjusted for inflation, is now down 7.4% from its all-time high of 71.99 in May 2015. Here are more clues from Hagerty’s report:

The number of owners expressing the belief that the values of their vehicles are rising continues to fall. The number is at its lowest since November 2013 for owners of mainstream vehicles and at its lowest since May 2012 for owners of high-end vehicles.

Expert sentiment dropped for the first time since November. Market observers have cited that many cars with prior auction results have been changing hands for less money than in the past.

Then there is the price-based “Hagerty Market Index.” It fell 1.44 points to 161.06 in April, down 10.8% year-over-year, and down 13.3% from its all-time high in September 2015 (185.86).

The Hagerty Market Index, which is adjusted for inflation and is based on changes in dollars and volume of the market, fell about 20% during the Great Recession, then surged 75% on an inflation-adjusted basis to its peak in September 2015. Since then, it has been heading back down. It has now fallen nearly 25 points from its peak, exceeding its point decline during the Financial Crisis:

 

The data includes the results from the collectible automobile auction on Amelia Island off the coast of Florida on March 10-12. The auction had been hyped with the usual fanfare to stir up the animal spirits’ desire for beautiful machines.

“In recent years the Amelia Island Auctions have quickly emerged as a significant indicator for the public auctions segment of the classic car market,” Jonathan Klinger, the spokesman for Hagerty, told Bloomberg before the auction. “It is no longer just Arizona auctions in January and Monterey in August that matter.”

The auction was going to be hot. Bloomberg:

According to Hagerty predictions, the final cull will be $135 million to $140 million among all five auction companies that will sell there this year (RM Sotheby’s, Gooding & Co., Bonhams, Hollywood Wheels, and Motostalgia).

The article showcased “the highest-priced individual standout cars among the lot,” and I added in bold what then happened to them at the auction:

• 1957 Jaguar XKSS Roadster, expected to take $16 million with Gooding & Co. (did not sell)
• 1928 Bentley 4 1/2-Litre Le Mans Roadster, expected to take $6.5 million for RM Sotheby’s (did not sell)
• 1950 Ferrari 166 MM Barchetta Spider, expected to take $8 million, for RM Sotheby’s (did not sell)

Yep, the top three most hyped cars didn’t sell! Rounding off the top ten cars, there were these seven gorgeous machines, according to the New Atlas (results in bold):

1. 1961 Ferrari 250 GT SWB Berlinetta (did not sell)
2. 1937 Bugatti Type 57S Cabriolet by Vanvooren (sold for $7,700,000)
3. 1998 Porsche 911 GT1 Strassenversion (sold for $5,665,000)
4. 2015 Ferrari La Ferrari (did not sell)
5. 1995 Ferrari F50 (sold for $2,640,000)
6. 2015 McLaren P1 (sold for $2,392,500)
7. 1956 Maserati A6G/54 Coupe Series III by Frua (sold for $2,365,000)

In total, sales didn’t hit $140 million. Instead they dropped 13.4% from last year’s total to only $121.3 million, even though 14% more cars went through the auction this year. And the average price, according to Hagerty cited by New Atlas, plunged 21% from a year ago to $332,345.

New Atlas blamed the weather and “all the disparate factors that influenced the weekend and the sale” – such as the absence of a Ferrari 250 GT SWB California Spyder that sold last year for $17.2 million or the Jerry Seinfeld Porsche Collection which sold for $22.2 million last year, when the market was still hot – and so the result “doesn’t mean much.”

Indeed, myriad factors impact auction results, including the mix of cars going through, but also what collectors are willing to buy and what prices they’re willing to pay. The fact that some of the highest-priced cars going through the auction failed to sell may have something to do with it.

In the grander scheme of things, and as a red flag, this is another asset class that has enormously benefited from asset price inflation, stirred up by the Fed’s well-targeted monetary policies since the Financial Crisis. But prices peaked shortly after QE ended and have ratcheted lower in tiny increments. While stocks got a huge boost since the US election, classic car investors appear to not have gotten the memo – or perhaps they can see the writing on the wall, with sellers becoming more eager and buyers more careful?

The American economy has split in two, but the aggregate numbers of wealth and debt obscure the profound risks. Read… So Who Are the Debt Slaves in this Rich Nation?

via http://ift.tt/2pvhRAO Wolf Richter

China is the world’s largest net importer of crude oil, and in recent years, China’s crude oil imports have increasingly come from countries outside the Organization of the Petroleum Exporting Countries (OPEC). As the EIA reports in a recent blog post, while OPEC countries still made up most (57%) of China’s 7.6 million barrels per day (b/d) of crude oil imports in 2016, crude oil from non-OPEC countries made up 65% of the growth in China’s imports between 2012 and 2016. Leading non-OPEC suppliers included Russia (14% of total imports), Oman (9%), and Brazil (5%).

On an average annual basis, China’s crude oil imports increased by 2.2 million b/d between 2012 and 2016, and the non-OPEC countries’ share increased from 34% to 43% over the period. Market shares for China’s top three non-OPEC suppliers (Russia, Oman, and Brazil), all increased over these years. While still comparatively small as a share of China’s crude oil imports, imports from Brazil reached a record high of 0.6 million b/d in December 2016, and imports from the United Kingdom reached a high of 0.2 million b/d in February 2017.

Growth in China’s total crude oil imports in 2016 reflected both lower domestic crude oil production and continued demand growth. After increasing steadily between 2012 and 2015, China’s crude oil production declined significantly in 2016. Total liquids supply in China averaged 4.9 million b/d in 2016, a year-over-year decline of 0.3 million b/d, the largest drop for any non-OPEC country in 2016. U.S. crude oil production fell by more than 0.5 million b/d in 2016, but total liquids declined by less than 0.3 million b/d because other liquids production increased by less than 0.3 million b/d.

Much of Chinese production growth from 2012 through 2015 was driven by more expensive drilling and production techniques, such as enhanced oil recovery (EOR) in older fields. As oil prices declined during 2016, investments in developing new reserves also fell and were not high enough to offset the natural production declines of older fields.

China’s demand growth has remained the world’s largest in every year since 2009, increasing 0.4 million b/d in 2016. As China increased its imports to address a growing gap between its domestic production and demand, it surpassed the United States as the world’s largest net importer of total petroleum (crude oil and petroleum products) in 2014. The United States imports more crude oil and exports more crude oil and petroleum products than China.

Other factors contributed to an increase in Chinese crude oil imports. For example, in July 2015, the Chinese government began allowing independent refiners (those not owned by the government) to import crude oil. The independent refiners previously had restrictions on the amount of crude oil they could import and relied on domestic supply and fuel oil as primary feedstocks. Another factor is the Chinese government’s filling of new Strategic Petroleum Reserve sites.

via http://ift.tt/2psKyBh Tyler Durden

What tentative hope had emerged for a rebound for the U.S. restaurant industry at the start of the year, was doused last month when in its February Restaurant Industry Snapshot, TDn2K found that “Restaurant Sales and Traffic Tumble in February” and reported that same-store sales fell -3.7% in February, with traffic declining -5.0% . It did however leave a possibility that things may turn around as a result of the prompt disbursement of withheld tax refunds in the month, which it suggested may have adversely affected sales and traffic.

Alas, that did not happen, and restaurant struggles continued in March as sales and traffic again declined year-over-year: same-store sales were down 1.1% while traffic dropped 3.4%. March results were disappointing for an industry desperately trying to reverse performance trends; with sales now negative in 11 out of the last 12 months, the longest stretch since the financial crisis. There was a modest improvement sequentially, however, and while still negative, sales improved by 2.5% points compared to February as traffic rose marginally by 1.6%.

Explaining the sequential “improvement”, Victor Fernandez, executive director of insights and knowledge for TDn2K, said “March sales were expected to be somewhat better than February due in part to the catch-up of tax refunds that were initially delayed in February. In addition, the industry likely benefited from the shift in the Easter holiday, which fell in March in 2016. For the largest segments (quick service and casual dining), this holiday represents a potential loss of sales.”

However, it was not enough: “The fact that sales were still negative in March given these tailwinds highlights the challenge chains have faced since the recession. Factors like restaurant oversupply and additional competition for dining occasions continue to take their toll on chain traffic.”

As TDn2K further adds, with a same-store sales decline of 1.6%, the first quarter of 2017 was the fifth consecutive quarter of negative results. The last time the industry experienced a similar period was in 2009 and the first half of 2010, as the economy began recovery following the recession. Only this time the move is in the opposite direction. 

Furthermore, the first quarter of 2017 followed a very disappointing 2.4 percent sales drop in the fourth quarter of 2016, highlighting the difficult operating environment currently facing many operators.

Worse, same-store traffic dropped even more, or -3.6% in Q1, consistent with the average -3.4% quarterly declines experienced since the beginning of 2016.

The growth rate in check average continues to trend down slowly. For the first quarter of 2017, the average check was up 1.9%, somewhat lower than the average 2.3%growth reported for 2016. This is likely the result of brands relying more on promotions and conservative menu price increases in response to continual declines in traffic. It confirms that restaurants don’t have even the most modest pricing power to offset volume declines.

On the other side of the spectrum, as has been the case in recent quarters, segments with the highest and lowest average check experienced better results. The strongest performance in the first quarter came from upscale casual, followed by fine dining and quick service. It is important to mention that fine dining and upscale casual are among the segments most negatively impacted by the shift in Easter.

Meanwhile, the worst segments in the first quarter were family dining and fast casual. Family dining concepts were also among the most negatively affected by the Easter shift.

A separate report from the National Restaurant Association found that its proprietary Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 98.8 in February – up 0.2 percent from a level of 98.6 in January, however this was the fifth consecutive month in which the Current Situation Index contracted (below 100), as  operators continued to report dampened same-store sales and customer traffic levels.

Furthermore, the NRA found that restaurant operators overall continued to report soft same-store sales in February, with results that were similar to January’s levels. 33% of restaurant operators reported a same-store sales increase between February 2016 and February 2017, while 51% reported a sales decline, a deterioration from January. Restaurant operators also reported dampened customer traffic levels in February.

Only 27% of restaurant operators reported an increase in customer traffic between February 2016 and February 2017, while 57% reported a decline in customer traffic. In January, 26  percent of operators reported higher customer traffic levels, while 54% said their traffic declined.

One notable finding in the TDn2k report was that despite waiters and bartenders being the fastest growing job category under the Obama “recovery”, restaurant operators list finding enough qualified employees to keep restaurants fully staffed as a primary concern. This is mainly due to skyrocketing restaurant churn rates as current restaurant workers believe they can find better options elsewhere, only to return disappointed. Turnover for restaurant hourly employees as well as managers increased again during February according to TDn2K’s People Report. These rates are currently higher than they have been in over ten years and rising.

Making matters worse for restaurants, some are finding that only by  offering higher compensation can they retain workers. So even if wages have been increasing slowly in recent years, this is expected to change soon as the labor market continues to tighten. In fact, according to a recent survey by People Report, about 80% of restaurant companies reported having to offer additional financial incentives to attract candidates in tough recruiting markets. In most almost all cases, those incentives take the form of higher base pay. Who would have though that there is a shortage of line cooks and waiters in the US.

While many continue to seek answers in the pernicious tailspin in the US restaurant industry within the supply side – pricing, competition, layout – the reality is that the key variable may remain with demand.  As some have speculated, it could simply be the reluctance or inability to eat out when money is being inflated elsewhere, to cover higher cost-of-living increases in other areas, such as rent or healthcare, even as wages for large parts of the population remain frozen.

To be sure, restaurant spending is a thermometer for discretionary spending, which varies with how well consumers are doing, and it’s the first to react as Wolf Richter correctly points out. When consumers hit their limits, the first things they cut are discretionary items, such as eating out.

As such, the worst tailspin in the US restaurant industry since 2009 remains the biggest flashing red alert suggesting that when it comes to that invincible dynamo behind the US economy, the American consumer, things have not been this bad in a long time.

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Authored by Simon Black via SovereignMan.com,

Last week the Internet was ablaze with disgust after a man was physically dragged off a United Airlines flight.

What’s amazing, though, is that there are countless cases of another industry abusing its customers in far, far worse ways than the airlines.

I’m talking, of course, about the banking industry.

1. Banks treat you like criminal suspects too.

Sure, United had a man dragged away like he was a rape suspect being hauled off to jail.

But banks treat their customers like criminal suspects on a daily basis.

If you think I’m exaggerating, try walking into your bank and asking to withdraw $20,000 in cash.

See how quickly they start acting like police investigators, demanding to know what you intend to do with your own savings.

Thanks to a law called the Bank Secrecy Act, banks are legally required to fill out “Suspicious Activity Reports” on their customers and send them to the government.

Banks filed nearly 1 million suspicious activity reports in 2016 alone.

Think about that; United treated one passenger like a criminal suspect. Banks treated 1 million customers like criminal suspects last year.

2. Banks nickel and dime you even more.

The airline industry is constantly being ridiculed for its incessant and ridiculous fees. Selecting a seat, checking a bag, booking over the phone, even ‘payment fees’.

My favorite is the ‘fuel surcharge,’ which most airlines imposed back in 2007-2008 to compensate for the high price of fuel after oil prices surged past $120.

Of course, when oil fell to below $30, they didn’t get rid of the fuel surcharge.

Airlines rake in tens of billions of dollars each year on these fees that absolutely infuriate their passengers.

But once again, banks are no different, endlessly nickeling and diming their customers with unnecessary fees… especially if you’re a small business owner.

Some of the most infuriating are fees for sending and receiving money.

To send a domestic wire transfer, for example, banks charge a fee of $25 to $35.

Yet the actual -cost- of banks sending each other money through the Federal Reserve system is just pennies– as low as 3 cents per transaction.

So banks are literally charging more than ONE THOUSAND TIMES as much for a wire transfer as it costs them.

3. Overbooking? Try fractional reserve banking

Last week’s United incident highlighted the common practice of overbooking, in which airlines deliberately sell more seats for a flight than actually exist.

If there are 150 seats on a plane, an airline might sell 160-165 seats on the assumption that 5% of ticketed passengers won’t show up.

In other words, they make money by selling something that doesn’t actually exist… which isn’t a problem until all the passengers show up.

Well, this happens in the banking industry as well; banks routinely make loans and charge interest on money that doesn’t actually exist.

It’s called “Fractional Reserve Banking”, a type of financial system that only requires banks to hold a tiny portion (or none) of their customers’ deposits in reserve.

If you deposit $100,000 at a bank, for example, the bank might hold 5% of that money in reserve, and loan out the remaining $95,000.

That $95,000 will eventually be deposited in the bank, upon which the bank will hold 5% of that amount ($4,750) and loan out the remaining $90,250.

This continues again and again until the bank has made $2 million in loans on a single $100,000 deposit.

The other $1.9 million doesn’t actually exist. But the bank is raking in the interest.

Just like airline overbooking, fractional reserve banking is a risky practice. And we saw in 2008 how quickly the entire system unraveled.

But that’s OK because. . .

4. Banks are in bed with the government too.

After the 9/11 attacks, the already-troubled airline industry was quickly sliding into bankruptcy, so the US government provided a $15 billion bailout through the Air Transportation Safety and Stabilization Act.

Airlines, as it turned out, were too big to fail.

Seven years later, the banks received a bailout worth more than $1.7 TRILLION, over 100x what the airlines received.

So no matter how stupid or risky their practices are, banks expect the taxpayer to bail them out.

5. Yet they brazenly screw their own customers

One of the things that was most disturbing about the United episode was how quickly the situation escalated to violence.

After overbooking the flight, United offered $800 in vouchers to passengers who voluntarily got off the plane.

$800, apparently, was the magic number. After breaching that limit they resorted to violence.

It shows a pitiful lack of respect for human dignity and a terrible violation of the public trust.

It’s the same in banking.

Hardly a month goes by without some major banking scandal– colluding on interest rates and exchange rates, manipulating asset prices, manufacturing fake accounts…

It never stops.

At least airlines pretend to compete with one another and engage in the occasional ‘fare war’.

Banks actually conspire to screw their customers.

And even when they get caught there are hardly any consequences.

One guy got dragged off a plane and the Internet lost its mind. But banks abuse their customers on a daily basis. Where’s the outrage?

If people are angry about United, they should give serious thought to their financial system.

Sadly there are no real alternatives to the airline industry.

If you need to get from Vancouver to London, you pretty much have to fly.

But with banking, there’s a whole world of solutions.

Everything from deposits to lending to exchange services can already be done better, faster, and cheaper outside of the banking system.

With options like Peer-to-Peer platforms, Blockchain services, or even physical cash and precious metals, there’s no reason to keep 100% of your savings in a system that is rigged against you.

Do you have a Plan B?

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There is seemingly no end to the growing problem of commercial real estate vacancies across the country.  And while we’ve spent a lot of time talking about the largest markets of New York and San Francisco, Houston, one of the hardest hit markets from the collapse of oil prices, is also in the midst of its own real estate collapse.  In fact, per a recent Q1 market update from NAI Partners, commercial vacancies in Houston have just reached a 22-year high.

Houston’s overall vacancy rate rose to 20.0% in Q1 2017, an increase of 100 basis points quarter-over-quarter and 260 basis points year-over-year. Net absorption stood at negative 778,758 sq. ft. as of the quarter’s end—on the heels of the more than 1.4 million sq. ft. of negative absorption for full-year 2016. In addition, both Houston citywide overall rent and leasing activity are down from last quarter, as well as from Q1 2016.

 

Meanwhile, the Houston market ended the first quarter of 2017 with negative 778,758 sq. ft. of net absorption after a brief recovery in early 2016.

 

And, after averaging just 3.3 million square feet in 2014 before the oil bust, the amount sublease space up for rent now stands at over 3x that level, or roughly 11.1 million square feet.

The overall availability rate, which measures the total amount of space being marketed for lease, rose to 25.7%, an increase of 70 basis points from the previous quarter’s 25.0%. Available sublease space has dipped from a peak of 12.0 million sq. ft. in Q3 2016 to 11.5 million sq. ft. at the end of 2016 and now settling at 11.1 million sq. ft. as of the first quarter of 2017. Before 2014, available sublease space in Houston had been averaging about 3.3 million sq. ft. Since the oil downturn began to manifest in the office market in 2014, available sublease space in Houston has more than tripled. With everything considered, the sublease market seems to have reached its bottom; however, there is more than 4.5 million sq. ft. of sublease space that will be returned to landlords in the form of direct space through 2019. The large sublease market is a critical element in regaining positive momentum and could be viewed as beneficial as the big blocks become more competitive.

 

All of which has, of course, pushed rents lower…

 

…but, as usual, has had minimal impact on the willingness of builders to continue adding new capacity, with roughly 2.0 million square feet of new real estate currently under construction, and about half of that space available for lease.

 

But we’re sure OPEC will save the day for Houston real estate developers any day now…

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