March Consumer Confidence Plunges

March consumer confidence plunged to 59.7 from 69.6, and well below expectations of a 67.5 print. Both components of the index dipped, with both the present situation and expectations indices sliding from 61.4 and 72.4, to 57.9 and 60.9, respectively.

And just to make sure the S&P ramps to all time highs on ongoing miserable economic, corporate profit and, of course, sovereign insolvency news, we got both New Home Sales, dropping from 431K to 411K, missing expectations of 420K, and the Richmond Fed also missing expectations of a 6 print, dropping from last month's 6 to 3. All in all, if this latest round of ugly and rapidly getting worse economic data doesn't send the S&P to new all time highs, nothing will. Well, perhaps another European country going broke may do the trick. Read more >>

Fed Pushes Into Uncharted Territory as Assets Hit $3 Trillion

Ben Bernanke, Vampire Chairman (Photo credit: DonkeyHotey)

Federal Reserve Chairman Ben S. Bernanke’s unprecedented bond buying pushed the Fed’s balance sheet to a record $3 trillion....

The Fed is purchasing $85 billion of securities every month, using the full force of its balance sheet to stoke the economic recovery. The central bank began $40 billion in monthly purchases of mortgage-backed securities in September and added $45 billion in Treasury securities to that pace this month.

“We’re in uncharted territory,” said Julia Coronado, chief economist for North America at BNP Paribas SA in New York, and a former Fed economist. Even as “the easy money will flow through financial markets and into the real economy at some point and lift us to a better growth trajectory,” the U.S. faces “a lot of risks,” she said. Read more >>

The High Price Of Understated Inflation

Since the process of adjustment began in the early 1980s, the officially-reported CPI-U number has diverged ever further from the underlying figure calculated on the traditional methodology. Fig. 4.2 gives an approximate idea of quite how distorted US inflation data seems to have become over three decades. Instead of the 3.2% number reported for 2011, for example real inflation was probably at least 7%. Worse still, the official numbers probably understate the sharp pick-up in inflation which America has been experiencing. A realistic appreciation of the inflationary threat would be almost certain to have forced very significant changes in monetary policy.

Taken in aggregate, the extent to which the loss of dollar purchasing power has been understated is almost certainly enormous. Between 1985 and 2011, official data shows that the dollar lost 53% of its value, but the decrease in purchasing power might stand at more like 75% on the basis of underlying data stripped of hedonics, substitution and geometric weighting.

The ramifications of understated inflation are huge. First, of course, and since pay deals often relate to reported CPI, wage rises for millions of Americans have been much smaller than they otherwise would have been. Small wonder, then, that millions of Americans feel much poorer than official figures tell them is the case. By the same token, those Americans in receipt of index-related pensions and benefits, too, have seen the real value of their incomes decline as a result of the severe (and cumulative) understatement of inflation. Read more >>

Americans Aged 18-29 Have A More Favorable Response To Socialism Than To Capitalism

In the prior post, we showed a presentation that looked at America from the perspective of a corporation and how it would be completely unsustainable. Luckily, there is little probability that America will ever have anything to do with S-Corp status, and far more likely end up as an agrarian Kolhoz. The reason: based on a Pew survey of America's youth, or those aged 18-29, more have a positive view response toward Socialism than they do toward Capitalism. We will leave it at that.

Socialism: 49% Positive / 43% Negative.
Capitalism: 46% Positive / 47% Negative.
Read More >>

Real Economy Still Sliding As Eating Out Continues Decline

As Bloomberg Briefs notes, spending on dining out has fallen from 4.5% growth at the beginning of the year to under 1.8% growth currently (the lowest since May 2010). Add to this the slowdown in jewelry spending and the drag on discretionary spending likely from Sandy and we suspect the modicum of estimate revisions that have started to be published by sell-side analysts will need a little more adjustment.

Real Consumer Spending remains stagnant. Read more >>

Jobless claims increased to 382,000

The job market is cooling as a global slowdown and looming U.S. tax policy changes keep businesses hesitant about hiring. Persistent unemployment, a “grave concern” according to Federal Reserve Chairman Ben S. Bernanke, is a focus for policy makers today as they meet to consider whether new steps are needed to boost the world’s biggest economy.

“The labor market continues to be disappointing,” said Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, who projected claims would rise to 380,000. “We’d like to see the hiring side pick up. Companies are very cautious given all the uncertainty.” Read more >>

Greek Trader Explains Why The Country Is Heading For Rebellion

A trader in Greece gives Business Insider a grim assessment of the mood in the country right now. Right now, I am afraid there is very little visibility regarding the political developments in the next few months. You might as well toss a coin. At some point, however, I believe we shall reach some kind of 'social tipping point' regarding the ability of the Greek households and society to absorb more austerity measures, the consequential continuing steep decline in economic activity and ever rising unemployment. The result may well be social rebellion, maybe even civic mutiny and associated political and parliamentary instability.

This is the the game plan that the neo-communists of Syriza have been preparing for over the past year or so and the one that they have actually reinforced whenever and wherever that was possible. Unfortunately, I cannot see a 'good ending' scenario, under the present circumstances.

Now when this tipping point may be reached, is anybody's guess. It could very well be, as close as only a few months away. I do not believe that you can find anybody, within or outside Greece, that still sincerely and truly believes that the troika process of 'internal devaluation' shall lead to a positive socioeconomic outcome since no effective counter-balancing economic development measures and incentives were ever implemented, or even seriously considered. Read more >>

U.S. Debt Just Grew by $11 Trillion

Republicans and Democrats spent last summer battling how best to save $2.1 trillion over the next decade. They are spending this summer battling how best to not save $2.1 trillion over the next decade. In the course of that year, the U.S. government’s fiscal gap -- the true measure of the nation’s indebtedness -- rose by $11 trillion.

The fiscal gap is the present value difference between projected future spending and revenue. It captures all government liabilities, whether they are official obligations to service Treasury bonds or unofficial commitments, such as paying for food stamps or buying drones.

Some question whether “official” and “unofficial” spending commitments can be added together. But calling particular obligations “official” doesn’t make them economically more important. Indeed, the government would sooner renege on Chinese holding U.S. Treasuries than on Americans collecting Social Security, especially because the U.S. can print money and service its bonds with watered-down dollars.

For its part, economic theory sees through labels and views a country’s official debt for what it is -- a linguistic construct devoid of real economic content. In contrast, the fiscal gap is theoretically well-defined and invariant to the choice of labels. Each labeling choice changes the mix of obligations between official and unofficial, but leaves the total unchanged. Read more >>

The man who changed Iceland - the message for Greece

The man who forced the government of Iceland to resign and kicked out the IMF representatives from his country, Hordur Torfarson, is now teaching meta-modern democracy throughout Europe.The rest of the world would benefit from following the example set by Iceland: Arresting the corrupt bankers who are responsible for the current economic turmoil.

Full employment contributes above all to achieving human dignity."
''It's nice to be important ,but is more important to be nice.''

The Death of Banks and the Future of Money

Banks are something between dinosaurs and vampires.

One thing is now clear to even the most casual observer: banks are not capitalist businesses. In their present incarnation they have little to do with the free market and no place in it. They are constantly oscillating between two positions:

One moment, they are a state protectorate, in desperate need of support from the state printing press or unlimited taxpayer funds, as, in the absence of such support, we are supposedly faced with the dreaded social fallout of complete financial collapse. The next moment they are a convenient tool for state policy, simply to be fed with ample bank reserves and enticed with low interest rates to create yet more cheap credit and help manufacture some artificial growth spurt.

Either the banks are the permanent welfare queens of the fiat money systems, or convenient policy levers for the macro-economic central planners. In any case, this is certainly not how a capitalist business should look.
Central banks and modern fiat money banks are quite simply a blot on the capitalist system. In order for capitalism to operate smoothly they will ultimately have to be removed. I believe that the underlying logic of capitalism will work in that direction. Trying to ‘reform’ the present system is a waste of time and energy. It is particularly unbecoming for libertarians as they run the risk of getting infected with the strains of statism that run through the system. Let’s replace this system with something better. With a market-based monetary system. Read more >>

The professed underlying fundamentals of the OWS movement

Image by david_shankbone via FlickrEeyores Enigma
First the most powerful meme of this movement, the one that scares TPTB to there core, is the fact that it is all about;

1% vs the other 99%

The accounting has been done by multiple organizations. The banking industry in the US and probably globally, have the assets to cover peoples deposits, merchant deposits and transactions, basically all of the "REAL ECONOMY's" money.

Unfortunately this only represents a small portion of the banking and finance industries activities. The other 90% of what they have been doing, essentially gambling and fraud, is what is being bailed out, that is what is at risk if (when) banking collapses, NOT the real economy.

This is a bit over simplified as banking collapse would certainly effect all trade and therefore the real economy but not in the way that they are saying and recovery of the real economy would be possible and maybe even reasonable whereas what is happening right now is that the real economy where 99% of us live, is being sucked dry, thrown under the bus, raped, or what have you, in order to cover the bad gambling debts of the 1%.

It's not just banking and finance it is all big corporations most of which have been augmenting low and declining revenues from making and selling stuff by participating in the financial dealings (gambling and fraud) also.

The politicians currently in charge (and those aspiring to be) got there positions and owe complete allegiance to BIG money. They will do what is best for the 1% NOT what is best for the 99%. In all fairness they are convinced that serving the 1% is whats best for the other 99%. I know this for a fact.

Money = a claim on the future.
1% controls all of the money.
99% have no future.

Bottom line This is a crisis of capitalism but this is where it gets tricky.

Debt driven Capitalism is and has been the optimal system to promote exponential growth. Resource depletion, over population, environmental degradation, are just a few of the detrimental results. A version of capitalism is what every Country around the world uses to juice growth, even communist China. Silly people think they can control capital, LOL!

Capitalism functions like a pyramid scheme in that there are always opportunities for more and more people to acquire wealth but only as long as multiples of additional participants are constantly coming in at the bottom. Oh, yeah, capitalism also requires that there is enough cheap, almost free energy coming on line at a similar or greater multiple in order for those participants to generate excess profit$ to pass on up the pyramid.

Right now there are plenty of willing participants but due to the lack of cheap, almost free energy these participants are unable to generate "excess profit$" to pass up the pyramid. Low life bums. So instead of money flowing, being pushed up that is, the relentless, unquenchable demand that "capital" is simply sucks it up anyway it can even if it has to create virtual participants with virtual excess profits. There is no stoping capital…FEED ME SEYMOUR!

Capital has muscle too and is always looking for cheap, almost free energy. Is it any coincidence that last of the light sweet crude is in Iraq and Libya?

Even that is not enough so it just keeps on expanding debt/credit and skimming off the top.

Debt/credit expansion has continued on well beyond anything that this planet can ever support.

Problem is whenever you talk this way people scream "your a damn communist/ socialist".

Clearly humanity needs to operate from a base of support that includes healthcare for all. education for all, security in old age for all, in order to maintain dignity and humanity and this is socialism. Above and beyond that maybe we can have some form of capitalism that allows people to reach there aspirations BUT CAN NEVER INTRUDE ON THE BASIC SOCIALISTIC BASE SYSTEM.

Truth is we kind of had this sort of setup here in the US for a while but then capital noticed this while heading out for some grub one day and…well the rest is history and here we are.

Maybe instead of Debt based Capitalism we should try Gift based Capitalism.

Marc Faber: Obama's Job Package 'a Complete Joke'

Image by twid via FlickrThe package is “another complete failure of Keynesian economics and corrupt interventions,” Faber told CNBC.com on Friday morning.

Other economists have welcomed the plan as it attempts to boost employment.

Faber's major problem is that governments around the world should be attempting to cut spending, not spend more.

“This all amid talk of deficit reductions,” said Faber. The package is a “complete joke.” More...

Whatever Happens, Commodities Win: Jim Rogers

Following Friday’s disappointing jobs data and a big jump in Chinese inflation over the weekend, Jim Rogers, the CEO and Chairman of Rogers Holdings, told CNBC that no matter what happens to the global economy, he will make money with his commodity positions.

“If the world economy gets better, I earn money on commodities. If the global economy gets worse then they will print more money and I will make money in commodities,” Rogers said in an interview with CNBC on Monday.

With the commodities market [cnbc explains] highly correlated with the greenback in recent months, Rogers said he is also long the dollar.

“I am long the dollar Euro as everyone was bearish. So I am long the dollar. In five years I may not be not be long the dollar but I am now. The dollar and commodities do not have to move in correlation despite what you see on CNBC,” Rogers said. More...

The 20 Most Influential Blogs in Financial Media

Kevin Depew
"Most investors would acknowledge that social media is playing an increasing role in their investment decisions," observes the UK Web site Mindful Money. "Yet no-one has mapped the emerging network of influence likely to be playing a crucial part in those decisions." Until now.

The presentation below provides a fascinating map of financial media influencers. The MindfulMoney top 20 should come as no surprise. You probably visit them daily, or at least discuss ideas they have unearthed long before the mainstream media stumbles onto them.

Here are the top 20, with links, followed by the presentation. Congratulations to all listed:

1. Naked Capitalism
2. Infectious Greed
3. The Big Picture
4. Jesse's Cross Roads Cafe
5. Zerohedge
6. Mish's global Economic Analysis
7. Calculated Risk
8. Paul Krugman's Blog
9. FT Alphaville
10. Ludwig von Mises Institute
11. The Market Trader
12. WSJ Blogs
13. The Epicurean Dealmaker
14.Credit Writedowns
15. Dealbreaker
16. China Financial Markets
17. Max Keiser
18. The Angry Bear
19. The Economist
20. Jr. Deputy Accountant

Consumer Spending Across All Income Groups Down in August

Year-over-year self-reported spending is down compared with July 2010 and August 2009

by Dennis Jacobe, Chief Economist

PRINCETON, NJ -- Americans' self-reported average daily spending in stores, restaurants, gas stations, and online averaged $63 per day during August -- down $5 from July, and down $2 compared with August 2009. Consumer discretionary year-over-year spending is thus running just slightly below the depressed "new normal" rate of a year ago.

Upper-Income Spending Remains Far Below May 2010 Levels

Upper-income Americans (those making $90,000 or more annually) reported spending an average of $109 per day in August, down $10 from June and July, and down $36 from May. Spending among this group is also down $7 compared with August 2009. Only once -- in May -- has 2010 upper-income spending exceeded the 2009 "new normal" spending range of $107 to $121 per day.

Month-Over-Month Middle- and Lower-Income Spending Falls

Middle- and lower-income Americans spent an average of $54 per day during August -- down from $64 in July and $62 in June, and lower than the $57 seen in August 2009. Americans in these income groups had been spending at the higher end of last year's "new normal" range of $52 to $61 but are now back to the lower end of that range. More...

No economic growth for years to come

Roubini's problem is he can't shake off the notion of growth, in this case posing as "lackluster growth". And everything he says, and presumably thinks, falls in that light. Maybe he’s so happy to be invited and celebrated everywhere in the world as Dr. Doom that he doesn't want to take the risk of scaring his benefactors away. "Doom" thus comes to mean low growth, while flat-out contraction is off the agenda.

But how realistic is that? Even allowing for the fact that the GDP is "not a very accurate" way to measure growth, it's already "officially" at 1.6% and heading down short term (a correction to 1.2% is in the works). So what are the short to mid-term prospects? Well, 70% of GDP is the American consumer, so there's where to look. The 91-day trailing Growth Index of the Consumer Metrics Institute has gone all the way down to -5.79%, while official GDP remains at 1.6% for the moment. That’s a difference of 7.39% that will have to be explained away somehow. More...

MasterCard: consumer spending dead in July

Image via CrunchBaseShoppers dug in their heels in July, bad news for the stalling economy and worse for struggling retailers. Excluding gasoline and autos, U.S. retail sales rose a meager 0.1% last month from June, according to figures released Thursday by MasterCard Advisors' SpendingPulse, which estimates spending in all forms including cash. Excluding autos, sales fell — 0.9%.

The Commerce Department releases its July spending figures Friday. The tepid month-to-month increase reported by SpendingPulse follows a 0.5% decline from May to June and a 2.1% drop from April to May.

Compared with a year earlier, however, July sales excluding autos and gasoline rose 1%. July's sales rose still more including gasoline — 1.4% — because gas price are up. The figures compare spending July 4 through July 31.

"It's growth, but it's pretty weak growth," says Kamalesh Rao, director of Economic Research for SpendingPulse.

With consumer spending — including major items like health care — accounting for 70% of U.S. economic activity, economists watch it closely for clues to what lies ahead. More...

The U.S. Middle Class Is Being Wiped Out: Here's the Stats to Prove It

Image by Steve took it via Flickr

From The Business Insider

Editor's note: Michael Snyder is editor of theeconomiccollapseblog.com

The 22 statistics detailed here prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

So why are we witnessing such fundamental changes? Well, the globalism and "free trade" that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects. It turns out that they didn't tell us that the "global economy" would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations. The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.

Giant Sucking Sound

The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world. After all, what corporation in their right mind is going to pay an American worker 10 times more (plus benefits) to do the same job? The world is fundamentally changing. Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money. Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new "global" labor pool.

What do most Americans have to offer in the marketplace other than their labor? Not much. The truth is that most Americans are absolutely dependent on someone else giving them a job. But today, U.S. workers are "less attractive" than ever. Compared to the rest of the world, American workers are extremely expensive, and the government keeps passing more rules and regulations seemingly on a monthly basis that makes it even more difficult to conduct business in the United States.

So corporations are moving operations out of the U.S. at breathtaking speed. Since the U.S. government does not penalize them for doing so, there really is no incentive for them to stay. More...

Why does the press continue to interview so-called "experts" that haven't a clue what's going on?

Cover via Amazon

Robert Herriman
Why does the business press continue to interview so-called "experts" that are frequently incorrect?

Lakshman Achuthan is the managing director for Economic Cycle Research Institute and is a regular when the media want to talk about economic isues like inflation and the recession. His opinions are laced throughout the media as an expert we should pay heed to. But should we?

Merriam-Webster defines expert as ”having, involving, or displaying special skill or knowledge derived from training or experience". So when the news media have you on as an expert, this is exactly what the public should expect.

In his latest interview, Mr. Achuthan states that the economic recovery is progressing normally. He also claims that there is no indication of a double dip recession. Are we really out of the recession now? He tends to think so, I vehemently disagree.

Mr. Achuthan either refuses to acknowledge or just doesn't understand that the fundamental issues still exist. The debt is still burgeoning, the deficit isn't decreasing, spending and printing is still way up and instead of encouraging people to save, we are pushing them to spend. Are we out of the recession--Hell no.

What are his magical predictions in the past that makes him this guru-expert that everyone wants to interview?

Back in August 2007, he was interviewed by PBS's Susie Gharib. In this timely and telling interview, Mr. Achuthan made the following "expert" predictions about inflation and recession-

"on both counts, we don't see a lot of trouble in the near term. Inflation is not spiraling out of control. So they have leeway to cut if they wanted to. It wouldn't be irresponsible in terms of being an inflation steward. On the other hand, the economy is not about to tip into recession. We had some revised GDP numbers out today, 4 percent growth in GDP. This is well above trend. I mean I was looking into the numbers. You had over 27 percent growth in nonresidential construction. That's -- that's business spending. That is big, booming activity".

That was the conventional wisdom (CV) of most of the “experts”, Ben Bernacke and Washington DC at that time and they were all wrong.

Then it took Achuthan till March 2008 to finally acknowledge we were in a recession or he calls it, a “recession of choice”?

Again the CV was used to explain why we didn’t avoid this recession—

“the economic stimulus package passed by Congress this year is too late to help many consumers and businesses and that the Federal Reserve was too timid when it started trimming interest rates last fall”.

Recession of choice? Those of us that understand the boom-and-bust cycle thoroughly understand that no amount of stimulus would have prevented the recession; as a matter of fact it will surely extend it if economics and history is any indicator.

We could look at Mr. Achuthan’s words in a couple years and again see how thoroughly off-base and misinforming he really is.

But unfortunately this won’t matter to the media who will continue to call on Mr. Achuthan as others of that ilk to offer their “expert” analysis for a mostly uneducated citizenry.

Gold is breaking out in all currencies

Neil Charnock
We have been looking at global trends and the debt markets very carefully this year so as to remain prudent about our views on the direction of gold and the Australian gold sector. This may seem like a long bow to draw however the thigh bone is connected to the knee bone when it comes to global markets and capital flows.

We specialize on coverage of gold and the Aussie gold stocks that make up the Australian gold sector which is one of the important gold share markets due to our high level of gold production and another key reason I will get to shortly. Another important part of our work is on the currencies due to the importance of the AUD to our gold sector and also for our international clients. We have even taken on a leading Fx broker as an advertiser due to the importance of Fx for international capital flows at this point in history.

Our thesis for this year has been one that includes continued trends on global markets on the back of stimulus capital along with increasing sovereign debt trouble and contagion which will (and has) produce fear. We have seen this as a positive environment for gold along with extreme volatility and distortions in the currencies and see no reason to change that view at this stage.

Gold is breaking out in all currencies and I forecasted a rise to the US$1180 area a week or so back. It has not quite made that target and may not, perhaps it will overshoot. After hitting record highs in Euro terms the gold price consolidation of the past 4.5 months in USD terms appears to be drawing to an end with only a few weeks left before we see lift off. I am expecting one last dip in the USD POG (price of gold) which will be short lived and reasonably shallow. The US$1100 level is not out of the question on this hypothesised pull back. More...