May 8 2012

How to bankrupt a generation of young Americans in four steps – young Americans living at home surges by 50 percent from 2005.

The viable pathway for success for many young Americans seems to have gotten very narrow in the last decade.  The opportunities for many young workers have become mired with an economy that is largely in a deep recession with limited quality positions.  Many are saddled with debt and taking on employment positions that may not even utilize the very expensive college education some have taken on.  Education is important but doing it intelligently has become tougher since we are living in a student loan bubble.  Many young Americans have been forced to move back home to live with mom and dad because of the shoddy economy even if they have a job.  Each point of data suggests that we will have a less affluent generation coming forward yet this is the generation that is largely going to shoulder the burden of unsupportable government debt?  The bill is largely coming due but many younger Americans are already starting with a negative net worth.

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May 5 2012

The chicanery between the Fed and ECB – twin balance sheets near peak levels and many European nations back in recession. Methods of understating US unemployment rates.

The Fed and ECB (European Central Bank) have taken notes from the exact playbook in dealing with the global financial crisis.  People tend to believe that these are somehow fully set government agencies but in reality, they are designed to protect their number one constituency group.  The Fed and ECB have the primary mission of protecting select financial institutions.  At their core they are where the bankers bank.  I was examining the balance sheets of both the Fed and ECB and from 2008 onward their reactions to the financial crisis have been nearly mirror images.  But ask most Americans and Europeans if their trillion dollars of asset maneuvers have worked out.  To the contrary, many of the European nations are back in recessions while in the US the unemployment rate only falls because people are dropping out of the workforce or being shadowed out in colleges with massive student debt.  The central banks have succeeded in allowing the financial system to essentially transfer the waste onto the backs of the public.

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May 3 2012

Contagion and the viral spreading of debt based systems – CEO pay at regional banks surge on average to $10.5 million thanks to bailouts while austerity is forced onto the middle class.

The biggest economy in the world just reached a new peak with their unemployment rate.  We are not talking about the United States but the massive block in the Eurozone.  The unemployment rate in the 17 country block reached a new all-time high at 10.9 percent as austerity measures are being used to combat massive levels of debt.  There is no single rule of thumb as to how much debt is too much.  A few respected economists from the 1800s once stated that too much debt is reached when the market suddenly acknowledges that too much debt has been reached.  In Europe it appears that this apex of debt has been reached and certainly in a handful of economies too much debt has been reached. The trouble of course is that Europe is a massive trading partner to the US but also the world.  It is naïve to think that issues in the European zone will not trickle over to our already fragile economy.  The working and middle class are likely to have another tough challenge put ahead of them as countries overseas begin redefining what life is like with too much debt.        

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May 1 2012

Middle class dysphoria – What does the new American Dream look like? Inflated college tuition, lower home ownership rates, and compressed wages.

The American Dream was always tied to economic prosperity.  The ability to work and save for a respectable retirement seemed cornerstones to this vision of middle class success.  The idea that future generations would have it better seemed to also be part of this vision of economic prosperity.  The last two decades have seen a dramatic shift to this vision.  The struggle to stay in the middle class is getting more difficult since more are being pushed into the poor or working poor categories.  The recovery has been largely an odd accounting function courtesy of bailouts to the banks and massive government spending.  Today, we have the largest number of Americans on food stamps.  Those seeking to follow their desire to get a better education are saddled with a minefield of student debt and subpar institutions that simply look to steal their money and give them a piece of paper that is hardly recognized in any professional context.  The home ownership rate, the symbolism of the American Dream is drifting further into the shadows.

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Apr 28 2012

The cascading waves of debt implosion – 5 charts looking at debt leverage, velocity of money, and contagion impacts from the European crisis.

If you inject money out of thin air into the banking sector but no quality jobs emerge, is the result a success?  The bailout mission statement revolved around keeping credit available for the American public.  The absolute opposite has occurred.  A massive internal credit deleveraging has been taking place but the banks have simply hoarded the money like a squirrel hogging all the nuts.  The public is dealing with a great deal of austerity in the form of higher inflation in daily good items and an employment market that is extremely constricted.  The issue continues to be that we are treating this crisis as one of liquidity when it has always been one of solvency.  What function is it giving a bank billions of additional dollars if there are so few qualified people to lend to?  We even see this restriction of money circulation when we examine the velocity of money.  We are simply injecting more debt into the economy with decreasing results.  Higher energy, food, healthcare, and other daily goods have risen beyond the average paycheck of most Americans as a consequence.

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Apr 25 2012

The young and the jobless – Half of bachelor’s degree-holders under the age of 25 are unemployed or underemployed, in the US. Social Security short fall highlights deeper reality of economy.

The news for young Americans doesn’t seem to be getting any better.  Earlier this week it was announced that Social Security will be running out of funds by 2033, three years earlier than expected.  What this means if nothing is changed is that future retirees will receive only 75 percent of expected payouts.  Not a good item of news considering inflation in daily goods is high thanks to the bailout policies and quantitative digital printing taken on by the Federal Reserve.  The full retirement age of Social Security for those impacted will be 66 or 67 by 2033 for everyone born after 1954 or 1960 and 21 years from now will come up a lot quicker than most realize.  Yet many recent graduates, those under 25 with a bachelor’s degree are either unemployed or severely underemployed.  What is worse, the young generation is shouldering most of the massive debt in the student loan market.  Older generations are being impacted since many are moving back home or are requiring resources merely to stay afloat.  Hard to imagine a future generation with lower financial living standards but this is simply the continuing trend of breaking apart the middle class.

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Apr 22 2012

The big swindle and a fog of debt – hiding the unemployed in the higher education bubble and three years of economic recovery equates to 11.5 million more Americans on food stamps.

A large part of our recovery is running on public relations trickery and smoke and mirrors debt machinery.  Let me explain what I mean by this since on the surface we have been out of a recession since the summer of 2009.  Government debt is soaring and public debt in certain sectors is flying off the charts.  Take for example food stamp usage and student loan debt.  These payments typically rise during tough times as would be expected.  So you would conclude that being in year three of this so-called recovery that costs for both of these sectors would be retreating.  You would be absolutely wrong in this Alice and Wonderland debt world.  The student debt market has become a predatory landmine for prospective students and continues to grow like a wild fungus.  Food stamp usage is expected to be high deep into 2014.  Can you call it a recovery by using accounting magic that actually hides the continuing deterioration of the middle class?

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