Global Economy Bursting?

[Couch Potato]

The sales volume of gasoline has dropped to 1998 levels but notice the price per gallon.

Also note the falling volume after 2011 as price rose.

The difference between the recession of 2001 and 2009 is volume sales continued to rise during the 2001 recession.

There is also a difference in the time of year it started and the duration, which are the major reason behind the difference in volume.

 

[Big ole Boy]

No Collective Shame

Bernanke's official denial on bank carry trades and the tax on savers - translated

"Banks are involved in a huge carry trade on US treasuries, with the Fed's approval. The Fed understands low interest rates are a tax on savers and a brutal punishment to those on fixed income. However, we don't care. The Fed encourages the carry trade to help bail out banks still in trouble over bad real estate loans, and still hiding other losses off their balance sheets. We are beholden to the banks and operate our monetary policy for them whenever they get in trouble."

Command and control economy - this is the devil if there ever was one. What you don't believe in the devil? OK, but to Joe Smoe - his soul and his freedom has been sold off to the whims of ruling class flesh who have horse drawn carriages - they sit on the riding seat and lash out at the mindless bankers to lend at any cost .......and the bankers lash out at the appraisers .....

.... and now we lash back at them ... for their utter lack of shame ...

... but what are we really ? .... maybe they are not the devil ... maybe we are the devil ..... flesh looking for another meal and another opportunity to procreate ....

... at some point the ruling class has to slow down consumption ...... of energy ........ no purpose in breeding zombie consumers ....... profit without purpose .....


.... maybe their is a silver lining ...... its just that it does not include Joe Smoe .....

... Maybe we should have Joe Smoe graphs ... ah, but who use them? - they are not the empowered class ..... let them eat cake graphs ... thats what we get .....

... let them eat cake graphs ....

..if only Joe Smoe could think his way out of being a Joe Smoe ... oh yea, thats education ...... what education ...... ?

... If only I had done this or done that early on .....

.... O well, might as well just be some kind deep breathing Yogi instead at this point ......

... Moral - enjoy your mistakes and find happy bridges

 

[Randolph Kinney]

The graph is from the St. Louis Fed FRED database. The blue line is the employment level of those 55 years of age and older (scale on the left), and the red line is the employment level of all workers (scale on the right).

Note that the number of employed 55 and over has risen more or less steadily since before the beginning of the Great Recession, growing by over 4 million, while the number of jobs for all workers has dropped by 8 million and is still down by over 4 million.

Since the end of the recession, the number of jobs has grown by less than 3 million, all of which have been gained by those in the 55 year and older category! And then some: Boomers have taken “market share” from those who are younger. And this will continue especially as seniors are not keeping up with the cost of living.

The unemployment rate for age group 20 to 24 is 13.2%. While a college education is important, the young also now need a skill that an employer wants; a degree is not enough. And that is one of the reasons why Boomers, who have had the time to develop the skills, are taking job-market share.

• As of 2012-06 the civilian labor force was 155,163,000.
• As of 2012-06 there were 111,145,000 in the private workforce.
• As of 2012-06 there were 56,174,538 collecting some form of SS or disability benefit.

The ratio of SS beneficiaries to private employees has thus passed the 50% mark (50.54%).

 

[Terrel L. Shields]

And this will continue especially as seniors are not keeping up with the cost of living.

Which delays not only those who want to enter the workforce from entry level, but the 30-50 crowd is stuck in jobs waiting for a promotion that does not come because of the 70 year olds who are hanging on in the senior position.

The young are doomed to, on average, lose ground. And so how are they going to contribute suffiicent cash to put their elders thru the golden years and save enough for themselves? The result is a rapidly shrinking population as folks put off families, etc. And that has even worse implications for who is going to pay for those underpaid employees...do we have to depend upon immigration? And at what point will immigrants realize America might not be the best place to migrate to.

 

[Randolph Kinney]

Odds of Global Recession Are 100%: Marc Faber

http://www.cnbc.com/id/48768746

There’s still a 100 percent chance the world heads into recession, Marc Faber, publisher of “The Gloom, Boom & Doom Report,” told CNBC’s “Closing Bell” on Thursday, echoing a call he made in May.

When you look at the major economies, Europe, the U.S., China and the emerging markets that are dependent on China for growth, Faber, aka Dr. Doom, only sees weakness.

“Europe is already in recession,” he said. “Germany is still growing very, very slightly, but is likely to go into recession soon.”

Growth in the U.S. is also falling off. “The U.S. economy has decelerated and I don’t see much growth in the next six to 12 months,” Faber said.

There’s also little the Federal Reserve and other policy makers can do to turn the U.S. economy around. “I think that if you look at the injection of liquidity and the intervention by the Federal Reserve and the Treasury with fiscal measures, it has already impoverished the U.S. economy,” he said.

It would take “massive easing, a huge balance sheet expansion,” to boost economic activity in the U.S., according to Faber.

Faber also doesn’t expect much change in the U.S.’s finances regardless of who wins the election in November. “The deficit is $1.3 trillion and, in my view, will go up,” he cautioned.

Even corporate profits, the lone bright spot, look to be at risk. “The corporate sector has recovered remarkably since the trough in earnings in 2009 and we are at record high earnings,” Faber said, but added, “Corporate profits will disappoint over the next 12 to 18 months.”

 

[Couch Potato]

You mean to tell me the publisher of “The Gloom, Boom & Doom Report,” is forecasting bad times ahead? I'm shocked!

 

[DTB]

You mean to tell me the publisher of “The Gloom, Boom & Doom Report,” is forecasting bad times ahead? I'm shocked!

The Howard Ruff of today. :laugh:

 

[Randolph Kinney]

GM Wants to Up Credit Line - Pension Concern

http://online.wsj.com/article/SB10000872396390444270404577609562924870928.html

General Motors Co. is in preliminary talks with banks to potentially double its $5 billion line of credit as the auto maker looks to strengthen its balance sheet and shrink pension obligations, according to people with knowledge of the discussions.

The world's largest auto maker by sales is in no danger of running short on cash. The Detroit company has very little debt and held about $33 billion in available cash at June 30. Analysts believe it needs roughly $20 billion to operate comfortably. It currently has an available line of credit of $5 billion.

But GM could have hefty cash needs ahead. Its European operations are racking up major losses, it is increasing capital spending on new vehicles, and it may want to repurchase shares held by the U.S. Treasury. GM also wants to reduce its U.S. pension obligations. Pensions for hourly, union workers and retirees are underfunded by about $10 billion and have been a major concern for investors.

GM hasn't tapped its existing credit line, nor has it signaled any plans to do so. Revolving lines of credit can be more costly than other types of loans and are typically used only as a backup. However, undrawn credit lines add to a company's liquidity; having greater available credit could allow GM to spend more cash without incurring the wrath of ratings firms and investors.

Additional liquidity in the form of a credit line could help the company in the eyes of credit ratings firms. GM's credit rating has seen steady upgrades by major ratings firms, but remains in junk territory. On Friday, Fitch upgraded GM's issuer default rating to BB+, one notch below investment grade.

A bigger line of credit "would serve as an insurance policy," Fitch Ratings analyst Stephen Brown said in an interview. "It helps to support the rating to extent they have additional access to liquidity."

GM is spending around $4 billion to shift responsibility of its $26 billion salaried retiree pension program to Prudential Financial Inc. in a deal set to close by year-end. A bigger drag on the company is the $71 billion in pension obligations it has to union-represented hourly workers and retirees. That account is underfunded by $10 billion, according to public filings.

GM executives have signaled publicly that they would like to shift the hourly plan to a private company, as they agreed to do with the pensions of salaried-worker retirees. Mr. Ammann said recently that he has told United Auto Workers union representatives that reducing pension risk is a priority and said there aren't regulatory hurdles to bringing such changes for hourly workers. Such as move, however, would cost more than $10 billion, people with knowledge of the plans said.

 

[Randolph Kinney]

Out of money, Detroit cuts back, fights back

http://www.marketwatch.com/story/out-of-money-detroit-cuts-back-fights-back-2012-08-28?siteid=nbkh

Detroit’s financial stabilization agreement requires a balanced budget, something it hasn’t had in 10 years. With its credit rating cut to double-C this year, Detroit can’t sell bonds to cover deficits in its general fund. For the fiscal year that began July 1, the city’s overall budget is $2.6 billion, a 16% cut from the year before. Assistance from the state is projected to rise slightly but is down substantially from 2000. Pummeled by continuing economic decline, the city’s other revenue sources — taxes on income, gaming, and property — are all down.

To narrow the deficit Bing announced that city workers — including firefighters and police — would take a 10% pay cut. Bing defended the measure as tough but necessary. Since Detroit can no longer borrow, he said, “without action the city will shut down.”

Bing also plans to cut city employment by 20%, or 2,500 jobs. Earlier this month he embraced a consultant’s recommendation that the bloated water and sewerage department cut its work force by 80%. Detroit’s powerful public-service unions are enraged and mounting legal challenges.

Detroit’s financial disaster is the result of fiscal neglect while the city’s tax base and population were falling precipitously. Detroit’s finances have been hammered by the 40% downsizing of the auto industry, the loss of 300,000 jobs in southeast Michigan, and a home foreclosure rate that has been among the highest in the country.

Detroit now ranks 18th, behind Indianapolis, Columbus and Charlotte. Its population has slipped below 700,000 and demographers say as many as 1,000 people continue to leave each month. Detroit’s population is down by two-thirds from 1950 and has fallen by a quarter of a million since 2000. While white flight accounted for the early decline, in recent years Detroit’s black middle class has joined the move to the suburbs or out of Michigan.

The staggering population loss, combined with the rise of charter schools, has translated into a 67% decline in Detroit’s public-school enrollment over the past decade. Many underutilized schools are being closed, staff is being reduced and teachers last year took a 10% pay cut. Detroit’s schools are already overseen by an emergency manager.

The most alarming effect of the population exodus is the huge inventory of abandoned and derelict buildings stretched out over a city that geographically is larger than Manhattan, Boston and San Francisco combined. Entire neighborhoods are hollowed out. Detroit has from 40,000 to 70,000 abandoned buildings, many of which have become havens for drugs and other criminal activity. Bing promises to tear down 10,000 buildings by the end of next year.


_______________________


It could happen to cities in California.

 

[Randolph Kinney]

Signs of a growing economy

Food Stamp Usage up 64% in Last Four Years, Cost up 114% in Same Period; SNAP Charts, Facts and Figures

SNAP stands for Supplemental Nutrition Assistance Program.