Interest-rate hikes are always a shock to the system but they have happened numerous times before over the past few decades: so why should they be such a problem now? The answer is that, this time, the situation is different in three crucial respects. First, interest rates have been stuck at unusually low levels for an unusually long period of time. (In Britain, the Bank of England’s rate has been 0.5 per cent since 2009.) Borrowers throughout the economy have got used to easy money; a generation of homeowners and investors has never seen anything else. After more than seven years of cheap debt, the shock of the old will be all the worse.
These increased geopolitical and financial stresses have served to absolutely crush commodity currencies such as the CAD, ZAR, and RUB with the USD as the beneficiary (though this USD strength may turn out to be a phyrric victory). It appears that all commodities are headed lower, and the “lower for longer” mantra should only be ignored at your peril. We may or may not be at the bottom, but how long we stay here is the crucial question to answer. The continued collapse in oil with WTI and Brent currently below $32 per barrel and copper trading below $2.00 per pound currently are but two examples.
It’s a reminder that, while the larger economy has steadily recovered from the Great Recession, the gains have not yet surfaced at the local level. Another study reports that just 65 of the 3,069 counties in the U.S. have fully recovered from the near-collapse in 2008. But it also speaks to the enduring effect of decades of wage stagnation, when many Americans’ pay has not kept up with inflation and they have been left further and further behind.
But once China’s slowdown starts impacting the American economy, the mainstream financial media trundles out the usual pundit suspects to declare that the U.S. and Chinese economies are decoupled , so a meltdown in China will have little impact on America–and vice versa.
Senate shoots down ‘audit the Fed’ proposal (richcabot)
“Requiring the Government Accountability Office to conduct a full and independent audit of the Fed each and every year, would be an important step towards making the Federal Reserve a more democratic institution that is responsive to the needs of ordinary Americans rather than the billionaires on Wall Street,” Sanders said in a statement following the vote.
Stay The Course! Which One? (Axel M.)
If you think you have a good process in place, what have you been doing with your portfolio in recent years to manage risk and ensure you are properly diversified? I am asking because in my conversations with hundreds of investors – professional and retail alike – the common thread was that investors enjoyed the ride. Now, if your investment philosophy is to “enjoy the ride,” then good for you. But if you think to have a process of managing risk and diversification, you may have noticed at least two phenomena…
Is the Auto Loan Bubble Ready to Pop? (richcabot)
While the media claims that this record has been reached because of drastic improvements to the US economy, they are once again failing to account for the central factor: credit expansion.
Is the American Worker Obsolete? (Tiffany D.)
But here’s what has me ruminating on the subject: Sometime in the next few months, Adidas — the world’s third-largest maker of sneakers — said it will power up its first Speedfactory in Ansbach, Germany — a manufacturing operation staffed entirely by robots with about a dozen human technicians.
Rosengren, who votes on the Fed’s rate-setting committee this year, also said a second hike will face a strict test as the Fed looks for tangible evidence that U.S. growth will be “at or above potential” and inflation is moving back up toward the Fed’s 2 percent target.
Chicago Fed chief Charles Evans, who like Rosengren is one of the central bank’s most dovish policymakers, expressed similar concerns.
The International War On Cash (thc0655)
When I first wrote on the subject, there was considerable criticism as to the possibility that such a programme would ever be attempted, let alone succeed. And, granted, it was so Orwellian that it was understandably seen as a crackpot idea. But since that time, the programme has been developing extremely rapidly. In the last six months alone, it has become so visible that it has even garnered a name – “the War on Cash”.
Last Days Of The House Of Saud (Aaron M.)
Forced by his brothers to nominate Prince Mohamad ben Nayef as heir, King Salman quickly isolated him and restricted his powers to the advantage of his own son, Prince Mohammed ben Salman, whose reckless and brutal nature is not restrained by the family Council, which no longer meets. De facto, he and his father govern alone, as autocrats with no counter-power, in a country which has never elected a Parliament, and where political parties are forbidden.
It comes from agnosis, the neoclassical Greek word for ignorance or ‘not knowing’, and ontology, the branch of metaphysics which deals with the nature of being. Agnotology is the study of wilful acts to spread confusion and deceit, usually to sell a product or win favour.
Gold – No Time Left for Conspiracy Theories (Aaron M.)
If you just step back and look objectively at what is unfolding from electronic currency to G20 demanding info on everyone and every penny that changes hands, then you can see where the future is headed. We do not have a democracy; that is total nonsense. The president appoints the heads of all departments. Nobody stands for election right down to the head of the Federal Reserve.
Some U.S. regulators and lawmakers have said VW may have to buy back older models. Diess did not say whether VW was discussing that, but said he was optimistic an agreement with U.S. regulators would be reached soon.
Russia Breaking Wall St Oil Price Monopoly (richcabot)
The sale of oil denominated in dollars is essential for the support of the US dollar. In turn, maintaining demand for dollars by world central banks for their currency reserves to back foreign trade of countries like China, Japan or Germany, is essential if the United States dollar is to remain the leading world reserve currency. That status as world’s leading reserve currency is one of two pillars of American hegemony since the end of World War II. The second pillar is world military supremacy.
The source of the drinking water in Flint was changed from Lake Huron to the Flint River in April 2014. Although the river water was sent to a city water treatment plant, its salt levels were overlooked, causing the lead pipes to corrode. The changeover was noticed by residents right away. Though they complained of bad tastes and smells after the changeover, the Department of Environmental Quality only conceded its failure in October of 2015. DEQ had not added the chemicals necessary to combat corrosion in the pipes, leaving the water to dissolve lead, a poisonous metal.
Gold & Silver
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