Aug 17 2012

Healthcare jobs expand servicing many older Americans with little to no savings – Since the recession started top employment fields related to healthcare. Over 10 million Americans no longer in the labor force.

Get used to sluggish growth.  Although the political season is in full force and every candidate is promising you unicorns and roads to utopia if you vote for them, the reality is we have some built in challenges that neither party can easily fix.  The unemployment rate has trickled lower thanks to lower wage jobs being added but also, a gain in the number of those not counted as part of the labor force.  The number of Americans deemed “not in the labor force” has surged by 10,000,000+ since the recession started.  As a consumption based system, what happens when the middle class begins to thin out?  At the core you need a good number of people with disposable income to fuel industry.  The ultra-rich are not going to buy 1,000 Ford’s just because they can and the 46 million on food stamps are not going to add any hidden boosters.  The stock market’s lack of volatility is basically betting on the Fed and European Central Bank bringing out a monetary bazooka.  The problem of course is that they’ve been throwing monetary RPGs at the system for years now and look at the results.

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Aug 14 2012

Welcome to the land of the poor and rich – Trading the middle class for economic extremes.

The extremes in the US have gotten more pronounced in this economic crisis.  It is hard to imagine a country where 46 million people are living with the assistance of food stamps while 6 of the 400 top income earners pay no federal tax.  I’m sure that just like most Americans you pay your fair share of taxes.  Of course the real burden has fallen on the middle class since the recession hit in 2007.  Most of the ultra-wealthy have their money vested in the stock market and since the lows in 2009, the market is up well over 100 percent.  The number one asset of the middle class in housing is still down over 30 percent from the peak and is trying to squeeze out a gain in 2012.  So you ask who in reality is paying for all these bailouts and transfer payments?  A massive amount of the burden is falling on the middle class and debt.

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Aug 10 2012

Long live the debt ceiling – approaching the fiscal cliff by spending $1 trillion more than is being taken in. A breakdown of government spending and revenues.

History does love to repeat itself especially when it comes to debt bubbles.  At the rate the US government is burning through money, we are likely to breach the debt ceiling limit even before we enter 2013.  We’re about $400 billion away from the $16.39 trillion limit but considering we’ve already spent $700+ billion that we don’t have this year, that lofty goal is likely to be met.  We’ve talked about the fiscal cliff and how the US dollar has essentially fallen off this position decades ago.  Yet the political talk is simply ignoring one of the most important items that will face this nation and we’ve known this scenario was coming for well over a decade.  Things appear better than they are because we are spending money we don’t have.  Does this sound familiar?  In the 2000s you had people buying massive homes they couldn’t afford and leasing cars that cost more than annual salaries of most individuals.  That didn’t exactly end well.  Yet today, we continue to spend money that is simply not there.  To think this will carry no consequences is simply naïve.

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Aug 7 2012

US Dollar already went off a fiscal cliff – what does a falling dollar mean to US families? Masking de-leveraging via debt markets.

People tend to have a short-term memory when it comes to financial panics.  Even when told that the US dollar has lost over 90+ percent of its purchasing power since 1914 when the Federal Reserve was first established, many just assume this is normal.  Inflation is as common as air.  Today’s purchasing power of one dollar is equivalent to 4 cents to put this in perspective.  The Fed is trying to inflate its way out of the massive debt we are facing.  We all know a fiscal cliff is approaching.  We’ve known this for well over a decade.  Yet we continue to spend and witness a slow decline to the purchasing power of the US dollar.  Much of the current economy is fueled by debt markets expanding but a saturation point will be reached.  Breaking points do happen and you need only look at Europe to see what happens when the scales tip.  What does a weaker dollar mean to American families?

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Aug 5 2012

The other side of persistently high unemployment – Underemployment rate shoots up to 15 percent but is actually more problematic because of the civilian employment-population ratio.

Spending time examining the employment report shows continuing trends that appear beyond the headline figures.  The number of Americans unemployed or marginally attached to the work-force increased to 15 percent and appears to be a new staple of our current workforce.  A key data point is the civilian employment-population ratio that shows a continuing drop.  The US is on a multi-decade trend where we have fewer working adults as a share of our overall population.  This is not a positive trend where we have an aging population with less affluent younger workers.  The headline rate is only a brief snapshot in time but the bigger trend of a shrinking middle class is all too prominent.

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Aug 2 2012

A crushing blow to male earnings – From 1969 to 2009 male earnings have fallen by 28 percent. The slow decline of the American middle class.

The contraction of the US middle class continues to roll along.  There are major generational rifts that are hitting the economy.  For example between 1960 and 2009 the number of men working fulltime has fallen from 83 percent to 66 percent.  A large number of people are categorized under “not making formal wages” and this group has tripled from 6 percent to 18 percent.  It is a troubling revelation that provides more insight into the reality that half of Americans make $25,000 or less per year.  It also sheds some light on the massive number of working poor that are also part of the 46 million Americans now receiving food assistance.  The decline in wages is real and the massive impact in net worth is also a big indicator of the crushing blow being experienced by the middle class.

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Jul 31 2012

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 is looking for some big sort of action by the ECB to keep the Euro together.  One thing is certain however and that is we are now in a bailout bubble.  The markets are now managed proxy systems of the too big to fail banks.  The system has been very effective in siphoning off wealth from the middle class of many countries and creating massive wealth discrepancies that have not been witnessed since the Great Depression.  Many in the public are woefully uninformed since rarely is this analysis leaked out in the media.  Yet as we go down this road, it is becoming more obvious that to keep this system going, more and more bailouts are required.

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