The engineering of bigger financial bubbles – corporate profits as a percent of GDP at record levels while unemployment is historically high and record number of Americans on transfer payments. Paying interest on excess reserves to banks for our own bailout funds.
The market is perched on the edge of a chair looking out for what the Federal Reserve and European Central Bank have to say. The almighty Oz is the only game in town. With the Fed, the expectation is of some sort of additional quantitative easing to prime the economy once again whereas the market [...]
Ph.D. in food stamps – the rise of food stamp usage among those with advanced degrees. Record number of households on food stamps.
t is hard to declare a recovery when a record 22.3 million households are now on food assistance. The latest data shows that 46.5 million Americans are still relying on SNAP, the food assistance program, to get by each month. Since this data lags, we see that in May we added 77,000 jobs but added [...]
Retirement means having to work in current economy – new survey shows 34 percent of workers in their 60s do not plan on retiring. The hunger for higher yields in a weak stock market.
The chase for yield is causing money to flow into unlikely places in the market. The low performance market has taken a toll on retirement planning models for millions of Americans nearing retirement age. Many of the models were built on the assumption that stock market gains would return 7 to 10 percent annual gains [...]
The hindrance of global debt – Spain accelerating to major bailouts and bond markets react. Eurozone stock markets in major decline.
It is always a sign of desperation to ban short selling. Trying to put an artificial bottom usually backfires and we are seeing this hit in Spain. The situation is unsustainable and has taken the headlines away from Greece. Spain is a much bigger economy and they are deep in a recession with headline unemployment [...]
The sinister nature of inflation – historic droughts push food costs up impacting 46 million Americans on food stamps. What happens when everything gets more expensive and incomes fall?
Inflation is an odd sort of economic beast. People take it for granted that inflation will always be a part of our life sort of like a quite humming background noise. The Federal Reserve is doing all it can to increase inflation so banks can essentially inflate their debts away. Yet the impact for most [...]
Refinancing debt into prosperity – most mortgage activity for refinances with applications up 97 percent from last year and car sales are down by over 50 percent from 2001.
Shuffling papers around on your desk does not mean you are being productive but might give the appearance of activity. Refinancing debt in countries in an insolvent position may feel good for the moment, but ultimately the position is unsustainable. You buy yourself a window of opportunity. With the Federal Reserve pushing mortgage rates to [...]
The looming student loan bubble – Almost half of all student borrowers were not making payments. 1 out of 4 in debt repayment past due on student debt.
The aggressive growth in student debt is setting the country up for another debt fueled bubble. Higher education costs have expanded so quickly that Americans now carry $1 trillion of student debt. Most of this expansion has occurred in a time when the return-on-investment for a college degree has fallen. Over the last ten years [...]
A clash of generations – 1 out of 6 Americans receiving Social Security benefits. A larger share of workforce dominated by older Americans.
The bill is coming due. A stunning 61,000,000+ Americans receive Social Security, Supplemental Security Income, or both. Add another 46,000,000+ Americans on food assistance and you begin to see why we are running on borrowed time on a variety of fronts. With Social Security, working Americans are taxed for current retirees. This works when you [...]
The four horsemen of the sluggish economy – Total credit market debt above $55 trillion, few jobs for many unemployed, the student debt bubble, and long-term compression of wages.
The US economy is facing tremendous financial hurdles in the years to come. The current market is being held together by a flood of debt that is masking underlying issues. Total credit market debt is many times larger than our annual GDP. Student loan debt continues to expand unabated even though the return-on-investment for many [...]
The dynamic central banking duo – ECB balance sheet up over €3.1 trillion mimicking Fed balance that is close to $3 trillion. Shuffling toxic assets into darkness.
You might have the vague memory that the European Central Bank reacted somewhat negatively to the Federal Reserve’s massive balance sheet expansion a few years ago. The ECB was not following in the same path as that of the Fed. Well fast forward to the current Euro crisis and the ECB now has a balance [...]