By Michael Lombardi for Profit Confidential: The retail sector in the US acts as a gauge of consumer spending. When it shows weakness, consumer spending is at risk, a potential drag on the economy. As it stands, the retail sector is providing troubling news on consumer spending. And the key back-to-school retail season is already in deep trouble.
China’s phenomenal construction bubble, driven by local governments that must keep their economies growing, no matter what the costs, and funded by state-owned megabanks, has led to an equally phenomenal misallocation of capital, overbuilding, waste, ghost cities, empty shopping malls, and now an epidemic of shuttered luxury department stores.
During the 14 years since the LTCM crisis, the Fed’s interest rate repression policies have resulted in an inflation-adjusted return on six-month CDs of exactly 0%, David Stockman writes. It revolutionized the saving and investment habits of the wealthiest households. Unlike hapless savers among the middle class, the rich had an escape route.
By John Mauldin, Mauldin Economics: The past 60 years – our idea of “normal” – enjoyed a demographic tailwind worth 1% of economic growth per year. If 3% growth is "normal," it’s really 2% growth plus a demographic tailwind of 1%. But now demography – one of the three Ds of our hurricane of debt, deficits, and demographics – is hitting economic growth.
By Don Quijones: Uruguay rarely draws international attention. Sandwiched between its much larger, much rowdier neighbors, it is, and has been for decades, a relative oasis of calm. But that is about to change: Uruguay is on the verge of becoming the first ever Latin American country to decriminalize the consumption of marijuana.
You don't seem to "think Abenomics is working,” a reader wrote, followed by tough questions and a comparison to Kyle Bass, who has been betting on a “full-blown Japan crisis.” It got me thinking. I’m attached to Japan. What started in 1996 has turned into a complex relationship. But now that Abenomics is the religion of salvation, I’m even more worried.
By Dennis Miller, of Miller's Money: One of the challenges facing retirees is how to bridge the gap between rising expenses and virtually stagnant Social Security checks and other sources of income. Hence, the idea of reverse mortgages. I can safely say that for the vast majority of our readers they are a poor investment, but not necessarily a bad idea.
By Michael Lombardi for Profit Confidential: Homebuilder stocks are heading into dangerous territory; investors need to take note, even if they don’t own these stocks. The move to the downside for this barometer of activity in the U.S. housing market is significant.
“According to intelligence officials,” who remained unnamed, the NSA is not just looking at meta-data when Americans send emails and texts overseas, as the government had proclaimed when the scandal first broke, but is actually searching the content, however steamy it might be.
By James Stafford of Oilprice.com: The 2010 Kalamazoo oil spill and the 2013 Exxon leak in Arkansas are the most glaring incidents: big leaks that are found and reported right away. But smaller leaks can persist for months or even years. If they’re reported at all, it’s because people have generally stumbled upon them by accident.
By Chriss Street: Just as the bombshell of the NSA’s handing information to the DEA through a secret program called Parallel Construction was about to break, the Obama Administration diverted attention by talking up the NSA’s intercepts of “chatter” about terrorist plots. But convictions in the US of some of the worst drug lords might now unravel.
Private Equity firms have seen this coming for months. They’re positioning themselves for it. In April, Leon Black, CEO of Apollo Global Management, explained it this way to an incredulous world: “We’re selling everything that’s not nailed down.” Now they’re setting records – but someone will end up holding the bag.
By Lacy H. Hunt, Ph.D., Economist: In its final forecast for 2011, made in late 2010, the Fed forecast that real GDP would rise 4% in 2011. Just prior to that projection, it expected even stronger growth. For 2012, the Fed projected 3.3% growth, with previous assessments even higher. In both years, their forecasts were more than double the actual result.
By Michael Lombardi, Profit Confidential: Detroit had no other options than to file for bankruptcy. Cities in California or Jefferson County, Alabama, have done the same for similar reasons: a budget deficit year-after-year as revenues declined and costs rose – especially pension costs. Bondholders got crushed. Now more cities are headed that way, including some BIG ones.
The cloud is a growth industry. And a religion in Silicon Valley: you’re better off with all your data and software stored in a data center somewhere on the planet. It’s a beacon of growth that revenue-challenged global tech giants like Oracle and IBM wave in the faces of antsy investors. But now, they’re going to pay a steep price for their cooperation with the NSA.
John Paulson’s hedge funds that broke the sub-prime mortgage market “demonstrate the manner in which momentum-chasing hot money had come to dominate the Wall Street casino,” writes David Stockman as he mercilessly dissects the hedge fund industry. “But then the hot hands went stone cold.”
An awful turn of events in France, just when everyone was hailing signs of a recovery, of which evidence has been trickling in, albeit mixed at best. If you held your tongue just right, you could see vague glimmers of hope. Then came the results from France’s fourth largest industry, hotels and restaurants (along with the idea that you can always raise taxes).
By Lee Adler, of The Wall Street Examiner: By now it’s clear to everybody, even the Fed, that QE does absolutely nothing to stimulate economic growth while fomenting bubbles in housing and stock prices. The Fed will disingenuously use steady job growth as an excuse to begin cutting back on QE soon. But its real reason lies elsewhere.
By Scott Belinski, of OilPrice.com: Twenty-two years after breaking free from the USSR, Ukraine is now attempting to do the unthinkable and permanently shake Russia’s hold on the country. The plan? Looking westward to the European Union and building an energy hub that might just revolutionize the region’s geopolitical status quo.
When Bear Stearns blew up in 2008, the New York Fed handed it to JP Morgan Chase – the beginning of a vast bailout corruption fest. Turns out, five years later, the execs who caused it to blow up have jobs on Wall Street that are more lucrative than ever. To honor these sordid details, Nick Stuart wrote a hilarious, cynical parody about the last days of Bear.