Middle Class Dismissed

The FED’s Money Trap

"The Federal Reserve, and therefore the economy, is caught on the horns of a dilemma of our own making. ZIRP (zero interest rate policy) and the aggressive pumping of money (upwards of $85 billion a month) into the financial system have tripled our money supply. Housing is perhaps the canary in the coal mine telling us that things are not going well and danger is close by. Even with 3% 30-year mortgages and no money down, we have to go back to 1997 to see such such low levels of home ownership in America." Continue reading →

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The Magic of Monetary Figures

"Hitting our magic number was a fantastic milestone for us. All the 60-80 hour work weeks, tosses and turns in the middle of the night, and struggles to keep our financial house in order had finally paid off. We would never have to worry about money again. We were home free… or so we thought. Now, twenty years later, our account balance is many times higher than our original magic number. We have come to grips with the fact that our magic number was aptly named. We had forgotten what magic really is: an illusion. In reality, our magic number was nothing more than ink on a sheet of paper that made us believe something that was not true." Continue reading →

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Why Are Your Children Buying Houses for Ben Bernanke?

"The Fed sells all those bonds to investors – who will, of course, want their money back, with interest. So, where will the money for paying off those bonds come from? From taxes, of course. When a government sells a bond, they are selling a right to their tax receipts. And that means your kids will be taxed to pay it all off. The Fed will keep the houses, of course, but hidden behind paragraphs of confusing financial and accounting terminology. Home ownership in America is falling off a cliff, as you can see in this graph. So, Mr. and Ms. America, get ready to meet your new landlords: Benny and the Banks." Continue reading →

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Credit Outbids Cash = Resource Wars

"Trader 1 only has cash that has been earned and saved; Trader 2 has access to leveraged credit (i.e. borrowing $100 based on $10 of cash collateral) and Trader 3 has a printing press that creates cash currency. As a result, Traders 2 and 3 could buy a lot more real-world goods at the fair than Trader 1, enabling the two traders with essentially unlimited credit/cash to reap enormous profits on carry-trades and other speculative trading. Not only can trader 2 and 3 purchase more goods than trader 1. Trader 2 and 3 have no limit on what they can bid and therefore can price trader 1 out of the market completely." Continue reading →

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Real Personal Income Points to Recession

"If real (that is, adjusted for loss of purchasing power a.k.a. inflation) income is declining, households have less income to spend and less income to leverage more debt. There are two noteworthy points in this chart. One is that real personal income has been negative for the past five years, with one tax-related spike in late 2012 as those who could do so reported income in 2012 rather than 2013 to take advantage of the lower tax rates that expired in 2012. The second point is that every time the black line (the 6-month annualized rate of change) of real personal income fell below 0% (that is, went negative), a recession occurred." Continue reading →

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Greek youth unemployment soars to 64.9% as Biden claims stake in Greece’s success

"Greek prime minister Antonis Samaras will hold talks with US President Barack Obama later on Thursday. Mr Samaras is keen to secure US approval for stimulus policies for Greece's recession-hit economy, in contrast to the austerity emphasis preferred by many of its European partners, most notably Germany. US vice president Joe Biden said America had 'a stake' in Greece's economic recovery and wanted the crisis-hit nation to stay in the eurozone. 'The administration has always taken the view that it's overwhelmingly in our interest to have Greece remain a strong and vital part of the eurozone,' he said." Continue reading →

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Driver’s License Renewal Gets Complicated

"From what I can tell, many of these problems trace back to the National Drivers Registry (NDR) Every state submits information to the NDR about drivers who have had the driver’s license suspended, revoked or who have been convicted of serious traffic violations. When a person applies for a driver’s license or renewal at the DMV, the person’s name and other identifying information such as date of birth, license number or social security number, is checked to see if they show up on the National Drivers Registry. If there is a match, he or she has to clear the problem up before a driver’s license can be issued." Continue reading →

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Short Circuiting The Market

"One of the hallmarks of the Soviet System was top-down central planning – with 'incentives' provided by the government. Natural market mechanisms were crippled. You got what the government decided you needed – at whatever price the government decided was appropriate. The result – back then – was the Trabant and Lada. Today, the result is electric lemons like the Tesla and Chevy Volt and Honda Fit EV. GM just announced it will drop the price of the 2014 Volt by $5,000 – to $34,995. This is before GM’s partner – the government – cuts the price down by another $7,500 via a taxpayer-funded individual subsidy." Continue reading →

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Anti-government protest rallies thousands in Tunisia

"Tens of thousands of protesters marched peacefully in the Tunisian capital on Tuesday evening demanding the resignation of the Islamist-led coalition government as the political crisis in the north African country grew. Around 40,000 people took to the streets of Tunis, according to police, while opposition leaders put the protest figures between 100,000 and 200,000. They waved Tunisian flags and chanted slogans against the moderate Islamist movement Ennahda that heads a three-part government coalition. The protesters were largely middle-class Tunisians from the capital, according to the Sunday Times." Continue reading →

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Diamond Jeweler Turns Alleged Smuggler as India Gold Prices Rise

"In January, jeweler Vihari Sheth was publicizing a ritzy new line of diamond-encrusted designs. Last week, she was arrested at Mumbai airport with nearly $400,000 of gold jewelry in her underwear and on her person. The 27-year-old has a store in Singapore and is married to a director of Mumbai-based Siyaram Silk Mills Ltd (SIYA), a suit maker that is a household name in the country. Her arrest offers a glimpse into how even the wealthy may be joining small jewelers and organized gangs to skirt new government taxes on bullion imports that have made gold about 9 percent more expensive in Indian stores." Continue reading →

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