This comes as U.S. economic data continues to signal a spring slowdown. Q1 GDP grew at a slower pace than expected, durable goods orders disappointed in April, and the housing market is showing signs of slowing.
Meanwhile, the current earnings season continues to be less than stellar….
In the rear view window, Q1 GDP was initially reported at +2.5% annualized. Once again, private growth was depressed by government austerity. March monthly data included a sharp decline in durable goods orders, which are now basically flat for a full year. New home sales increased slightly; existing home sales declined slightly. The University of Michigan confidence index increased in the second half of April, but is down month over month.
Let’s start this week’s look at the high frequency weekly indicators by looking at transports and consumer spending, which are the most significant changes:
Railroad transport from the AAR
- -5600 or -2.0% carloads YoY
- -1100 or -2.6% carloads ex-coal
- +1400 or +0.6% intermodal units
- -4200 or -0.8% YoY total loads
- Harpex up to 391
- Baltic Dry Index down 17 to 871
Those economies relatively rich at the start of the twentieth century have by and large seen their material wealth and prosperity explode. Those nations and economies that were relatively poor have grown richer, but for the most part slowly. The relative gulf between rich and poor economies has grown steadily over the past century. Today it is larger than at any time in humanity’s previous experience, or at least larger than at any time since only some tribes knew how to use fire. The gulf across which the world’s rich and poor regarded each other exists in every dimension: how much people consume, whether they can read, what tools they use, and how they make their living.
This glass can be viewed either as half empty or as half full. The glass is half empty: we live today in a world that is nearly the most unequal world ever. Only the world of the 1970s and 1980s—with standards of living in China greatly depressed by the legacy of Mao, his Great Leap Forward, and his Cultural Revolution and with standards of living in India depressed to a lesser extent by the License Raj of the Nehru Dynasty—was more unequal than ours is, even today. The glass is half full: most of the world has already made the transition to sustained economic growth; most people live in economies that (while far poorer than the leading-edge post-industrial nations of the world’s economic core) have successfully climbed onto the escalator of economic growth and thus the escalator to modernity. The economic transformation of most of the world is less than a century behind the of the leading-edge economies—only an eyeblink behind, at least from the millennial perspective. However, the millennial perspective is one that human beings can adopt only when contemplating the long-dead past—not when thinking about their present or their children’s future.
On the other hand, one and a half billion people live in economies that have not made the transition to economic growth, and have not climbed onto the escalator to modernity. It is hard to argue that the median inhabitant of Africa has a higher real income than his or her counterpart of a generation ago.
from Zero Hedge:
US commercial bank loans and leases flat since Lehman, and yet US GDP higher by $2 trillion since the biggest bankruptcy in history. How does one reconcile this monetary and growth quandary? Simple. Enter the Fed.
When it comes to the real measure of a nation’s economic output, one can rely on “flexible”, constantly changing definitions of what constitutes the creation of “goods and services” as well as transactions thereof, goalseeked to meet the propaganda of constant growth no matter what (and which it appears will now, arbitrarily, include intangibles such as iTunes), or one can go to the very core of “growth” (just ask the anti-Austerians for whom debt and growth are interchangeable) which is and has always been a reflection of the increase (or decrease) in broad and narrow liquidity or money supply, which in turn means how much money is created through loans, either via commercial banks or the central monetary authority, also known as the Federal Reserve.
by Monty Guild, Financial Sense:
There are More Tools in the Kit—We Expect to See them Used in the U.S. and Europe Before the Current Economic Malaise has Ended
So far, Japanese Prime Minister Shinzo Abe’s aggressive monetary easing is following pretty closely the prescription laid out in 1999 by a Princeton economics professor named Ben S. Bernanke. Back then, before the dotcom decline of 2000 and the 2008 crisis, Mr. Bernanke wrote the following in his appraisal how to help Japan regain its economic footing after 10 years of stagnation:
“Despite the apparent liquidity trap, monetary policymakers retain the power to increase nominal aggregate demand and the price level… [and] increased nominal spending and rising prices will lead to increases in real economic activity.”
In a Market Society, everything is for sale
For the rest of the world, capitalism is not working: A billion live on less than two dollars a day. With global population exploding to 10 billion by 2050, that inequality gap will grow, fueling revolutions, wars, adding more billionaires and more folks surviving on two bucks a day.
Why should you worry? Capitalism breeds corruption and inequality
But the 2008 crash challenged our faith in free-market capitalism: “The financial crisis did more than cast doubt on the ability of markets to allocate risk efficiently. It also prompted a widespread sense that markets have become detached from morals.”
Then comes the big question: So what? “Why worry that we are moving toward a society in which everything is up for sale?” Two big reasons concern Sandel:
First, inequality: “Where everything is for sale, life is harder for those of modest means.” If wealth just bought things, yachts, sports cars, and fancy vacations, inequalities wouldn’t matter much. “But as money comes to buy more and more, the distribution of income and wealth looms larger.”
Second, corruption: “Putting a price on the good things in life can corrupt them … markets don’t only allocate goods, they express and promote certain attitudes toward the goods being exchanged.” Also “corrupt the meaning of citizenship. Economists often assume that markets … do not affect the goods being exchanged. But this is untrue. Markets leave their mark.”
Dysfunctional politicians pushing Americans past point of no return
Can we change? “The appeal of using markets to put a price on public values, is that there’s no judgment on the preferences they satisfy.” Debate is unnecessary. Markets don’t “ask whether some ways of valuing goods are higher, or worthier, than others. If someone is willing to pay for sex, or a kidney … the only question the economist asks is ‘How much?’ Markets … don’t discriminate between worthy preferences and unworthy ones.” Markets may never draw the line, but do politicians, in secret?
What is certain: Capitalism is eliminating moral values, as Nobel economist Milton Friedman and capitalism’s philosopher Ayn Rand had been preaching to the generation. As Sandel puts it: “Each party to a deal decides for him- or herself what value to place on the things being exchanged. This nonjudgmental stance toward values lies at the heart of market reasoning, and explains much of its appeal.”
But unfortunately, market capitalism “has exacted a heavy price … drained public discourse of moral and civic energy.”
The good professor is a great teacher, with only one glaring flaw in his logic: he’s too idealistic, too quixotic. You don’t have to be a fatalist to know that without a total economic collapse, market capitalists — including 1,426 billionaires, Wall Street bankers, hedgers, lobbyists and every other special interest getting rich off the new market society — will never voluntarily surrender their control over the American political system.
Rather, they will blindly continue down their self-destructive path with an absolute conviction they are divinely guided by the Invisible Hand of Adam Smith, and perhaps even God.
Meanwhile, we have no choice but wait patiently till the collapse, anxiously aware that our bizarre political system will just keep degrading America’s moral values, pricing, buying, selling, trading morals like commodities, because in the final analysis everything has a price and everyone has a price in our hot new exciting Market Society.
The world economy is starting to disintegrate. What we are entering now is the culmination of a Ponzi scheme of printed money and credit that started with the creation of the Fed in 1913….
The world is heading into a horrific economic nightmare, and an inordinate amount of the suffering is going to fall on innocent children. If you want to get an idea of what America is going to look like in the not too distant future, just check out what is happening in Greece. At this point, Greece is experiencing a full-blown economic depression. As I have written about previously, the unemployment rate in Greece has now risen to 27 percent, which is much higher than the peak unemployment rate that the U.S. economy experienced during the Great Depression of the 1930s. And as you will read about below, child hunger is absolutely exploding in Greece right now. Some families are literally trying to survive on pasta and ketchup. But don’t think for a moment that it can’t happen here. Sadly, the truth is that child hunger is already rising very rapidly in our poverty-stricken cities. Never before have we had so many Americans unable to take care of themselves. Food stamp enrollment and child homelessness have soared to brand new all-time records, and there are actually thousands of Americans that are so poor that they live in tunnels underneath our cities. But for millions of other Americans, the suffering is not quite so dramatic. Instead, they just watch their hopes and their dreams slowly slip away as they struggle to find a way to make it from month to month. There are millions of parents that lead lives that are filled with constant stress and anxietyas they try to figure out how to provide the basics for their children. How do you tell a child that you can’t give them any dinner even though you have been trying as hard as you can? What many families go through on a regular basis is absolutely heartbreaking. Unfortunately, more poor families slip through the cracks with each passing day, and these are supposedly times in which we are experiencing an “economic recovery”. So what are things going to look like when the next major economic downturn strikes?
A recent New York Times article detailed the horrifying child hunger that we are witnessing in Greece right now. At some schools there are reports of children actually begging for food from their classmates…
As an elementary school principal, Leonidas Nikas is used to seeing children play, laugh and dream about the future. But recently he has seen something altogether different, something he thought was impossible in Greece: children picking through school trash cans for food; needy youngsters asking playmates for leftovers; and an 11-year-old boy, Pantelis Petrakis, bent over with hunger pains.
“He had eaten almost nothing at home,” Mr. Nikas said, sitting in his cramped school office near the port of Piraeus, a working-class suburb of Athens, as the sound of a jump rope skittered across the playground. He confronted Pantelis’s parents, who were ashamed and embarrassed but admitted that they had not been able to find work for months. Their savings were gone, and they were living on rations of pasta and ketchup.
Could you imagine that happening to your children or your grandchildren?
Don’t think that it can’t happen. Just a few years ago the Greek middle class was vibrant and thriving.
And we are starting to see hunger explode in other European countries as well. For example, in the UK the number of people receiving emergency food rations has increased by 170 percent over the past year.
This is one of the reasons why I get upset when people say that “things are getting better”. Yes, the stock market has been setting record highs lately, but things are most definitely not getting better.
Even during this false bubble of debt-fueled economic stability that we are enjoying right now, we continue to see hunger and poverty rise dramatically in America.
Since Barack Obama has been president, the number of Americans on food stamps has grown from 32 million to more than 47 million.
Will we all be on food stamps eventually?
Will we all become dependent on the government for our survival at some point?
According to the Boston Herald, even Tamerlan Tsarnaev was receiving government welfare benefits…
Marathon bombings mastermind Tamerlan Tsarnaev was living on taxpayer-funded state welfare benefits even as he was delving deep into the world of radical anti-American Islamism, the Herald has learned.
State officials confirmed last night that Tsarnaev, slain in a raging gun battle with police last Friday, was receiving benefits along with his wife, Katherine Russell Tsarnaev, and their 3-year-old daughter. The state’s Executive Office of Health and Human Services said those benefits ended in 2012 when the couple stopped meeting income eligibility limits.
Isn’t that crazy?
And yes, there are some people out there that are abusing the system. In fact, the cost of food stamp fraud has risen sharply to approximately $750 million in recent years.
But most of the people on these programs really need the help. Thanks to our incredibly foolish economic policies, there are not enough good jobs for everyone and there never will be again. The percentage of Americans that are unable to take care of themselves is going to continue to rise, and the suffering that we are witnessing right now is going to get much, much worse.
Not that things aren’t really, really bad already. Here are some signs that child hunger in America has already started to explode…
#1 Today, approximately 17 million children in the United States are facing food insecurity. In other words, that means that “one in four children in the country is living without consistent access to enough nutritious food to live a healthy life.”
#2 We are told that we live in the “wealthiest nation” on the planet, and yet more than one out of every four children in the United States is enrolled in the food stamp program.
#3 The average food stamp benefit breaks down to approximately $4 per person per day.
#4 It is being projected that approximately 50 percent of all U.S. children will be on food stamps before they reach the age of 18.
#5 It may be hard to believe, but approximately 57 percent of all children in the United States are currently living in homes that are either considered to be either “low income” or impoverished.
#6 The number of children living on $2.00 a day or less in the United States has grown to 2.8 million. That number has increased by 130 percent since 1996.
#7 According to Feeding America, “households with children reported food insecurity at a significantly higher rate than those without children, 20.6 percent compared to 12.2 percent”.
#8 According to a Feeding America hunger study, more than 37 million Americans are now being served by food pantries and soup kitchens.
Debate about the Fed ending its bond buying was premature. The US economy would collapse if it wasn’t on Fed life-support and the Fed knows it.
Conspiracy theorists of the world, believers in the hidden hands of the Rothschild’s & the Masons & the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The …
This is why we are facing a MAJOR economic upheaval. This is a GENERATIONAL shift. The youth are coming of age. They have no future under this economic system. This will explode in everyone’s face.