Economics

The FED Does Not Control the Federal Funds Rate

"Because they are sitting on $2 trillion of excess reserves, banks rarely borrow money overnight. They do not have to. They have plenty of reserves. Before late 2008, a bank would borrow overnight if its reserves threatened to fall below the legal requirement set by the FED. But now banks have so many reserves that they rarely borrow. So, there is little demand. So, the rate is low. The FOMC has increased the monetary base at times. In most of 2012, it decreased it. The FedFunds rate has not changed when FOMC policy has changed. Here is the inescapable conclusion: the Federal Reserve does not control this rate. The FED pretends that it does." Continue reading →

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Marc Faber on higher education & protecting yourself in economic collapse

"Marc Faber is an economic authority on global macroeconomics, capital markets, and investment and the Editor & Publisher of 'The Gloom Boom & Doom Report'. He spoke with The Prospect Group about university style formal education, the coming economic collapse, and the options people to preserve their wealth." Continue reading →

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Bangladesh police fire rubber bullets at workers seeking $100 month wage

"The vast majority of the impoverished nation’s three million workers earn a basic monthly wage of 3,000 taka ($38) — among the lowest in the world — following a deal between unions, the government and manufacturers in August 2010. On Saturday, dozens of factories were forced to shut after at least 20,000 workers left their machines to demand the wage rise. Angry demonstrators hurled stones at the outside of some 20 factories after managers refused to allow some employees to join the protests, police said. Widespread protests seeking wage rises in 2006 and 2010 led to deadly clashes, leaving dozens of workers dead and hundreds of factories vandalised." Continue reading →

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When Penalties are Preferable

"Nearly five in eight Americans polled by ABC News and The Washington Post say they 'lack the information needed to understand the changes that will take effect as the Affordable Care Act is implemented.' No surprise with a bill that stretched to 906 pages — plus 20,000 more of associated regulations. Besides, there’s nothing you can actually do in reaction to these stories. You’re a helpless spectator. Which is why we find the YouTube video much more intriguing… 'What we’re trying to communicate is, ‘No, you’re actually not required to buy health insurance,’' says Evan Feinberg. 'You might have to pay a fine, but that’s going to be cheaper for you and better for you.'" Continue reading →

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Companies Tell Employees to Find Their Own Health Insurance Policies

"Walgreen’s is the latest firm to drop an in-house health insurance plan. It will pay workers a flat rate. Workers will then have to find a decent plan. Workers will soon find how slim the pickings are. This may make insurance companies more competitive. But there is a huge problem. Large companies got low rates because everyone was insured. The law of large numbers took over. High-risk employees were offset by all the low-risk employees. Now each person will be considered as a separate applicant. High-risk people will be identifiable. Obamacare says that they must get coverage. But will they? We don’t know yet. The health care insurance exchanges are not ready for prime time yet." Continue reading →

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Mortgage slowdown forces new layoffs at Wells Fargo

"The ax is falling again at Wells Fargo's mortgage origination unit, as refinancing activity continues to slow. The bank on Wednesday sent 60-day notices of displacement to 1,800 employees across the country, citing a slowdown in activity throughout 2012 and early 2013. It's unclear how much Wells Fargo—the nation's largest mortgage provider—needs to rightsize to adjust to the new normal. The bank has already cut 3,000 jobs in origination and servicing, but activity has been bouncing around. Other Wall Street banks are making similar moves, as a sharp rise in rates has kept consumers from taking out or refinancing mortgages. JPMorgan laid off more than 2,000 employees in early August." Continue reading →

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Austrian Theory Explains and Exposes Booms and Bubbles

"The problem of the business cycle arises when the loan rate of interest diverges from the natural rate of interest. While this divergence could happen in a free banking system, the major divergence occurs under central bank regimes when large reductions of the interest rate are executed by injecting money into the banking system over a long period of time. A larger volume of loans is thereby made possible. The lower interest rate increases investment and consumption and reduces savings. These changes in the economy provide the conditions for a boom in the economy. If the new funds are funneled into a specific sector of the economy, a bubble could result." Continue reading →

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More Bad News for Low Wage Workers

"Soon American companies will have to disclose how their chief executive's paycheck compares with that of their average worker under a proposal unveiled by the SEC, reports The Guardian. If I am the CEO of a publicly traded company, I am going to do every thing I can to keep the ratio, between what I earn and my workers, as close as possible. This may mean shutting down operations that include many low wage workers. It may also mean automating jobs now performed by low wage workers. Low wage workers will become pariahs to be avoided at all costs by publicly traded companies. With less demand for low wage workers, their wages will decline." Continue reading →

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Washington Sees Incomes Soar as Most of U.S. Declines

"American incomes have tumbled over the last decade. But for many people in Washington, D.C., it’s been something of a party. The income of the typical D.C. household rose 23.3% between 2000 and 2012 to an inflation-adjusted $66,583, according to the Census Bureau’s American Community Survey. During this period, median household incomes for the nation as a whole dropped 6.6% — from $55,030 to $51,371. The Washington, D.C. metro area — which includes the surrounding suburbs in Maryland, Virginia and West Virginia — has it even better, with a median household income of $88,233 that ranks highest among the U.S.’s 25 most populous metro areas." Continue reading →

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