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What Washington State Can Expect From Higher K-12 Spending
Andrew J. Coulson
Just over a year ago, the Washington State Supreme Court ruled that the legislature was insufficiently funding K-12 education, and ordered it to boost that funding. A bi-partisan consensus now seems to have emerged that spending an extra $1 billion over the next two years is the proper first step in abiding with the Court’s ruling. Additional increases are likely to follow in later years. In a special budget session to begin today, the legislature will decide what balance of tax increases and economies in other areas will be used to raise the extra funds.
So Washington state taxpayers are looking at the prospect of ever higher taxes to pay for ever higher education spending far into the future. Unless business blossoms unexpectedly in the next few years, that’s liable to be economically painful. Will it be worth it? As a guide, we might look at how effective previous increases in spending have been.
Despite an increase in annual spending of $1.5 billion even after taking enrollment growth into account, academic performance has barely budged. The most hopeful signs are from the 4th (and uncharted 8th) grade NAEP scores, but there is good reason to doubt that even these very modest upticks lead to real reimprovements by the end of high school. One obvious indication of the problem is that SAT scores are essentially unchanged over the period. Another reason is that evidence from the NAEP Long Term Trends study reveals a pattern in which modest gains in the early grades evaporate by the end of high school (as can be seen on this nationwide chart of the performance of 17-year-olds). Based on the SAT scores, the same pattern likely holds in Washington state, but neither the Long Term Trends NAEP data series nor test results for older students are available at the state level.
Moreover, Washington state residents seem to drastically underestimate how much is spent per pupil in their public schools. In a 2012 survey, about half of respondents thought it was less than $8,000 / pupil. In fact, as shown in the chart above, total spending from all funds was $12,467 / pupil in that year. The survey also finds that when the public is informed about actual spending levels, support for increased K-12 spending falls dramatically (and that is true despite the fact that the survey in question misleadingly represented a lower partial spending figure as if it were total spending).
So Washington state has already tried even larger increases in spending than the one currently contemplated in Olympia with little or no academic effect. What’s the alternative? How about a proven policy for improving the achievement of students in both public and private schools that simultaneously saves millions of dollars?
View full post on Cato @ Liberty
American • Where Is The Recovery? A Higher Percentage Of Americans Had
Where Is The Recovery? A Higher Percentage Of Americans Had Jobs Three Years Ago
By Michael, on May 3rd, 2013
If you think that the latest employment numbers are good news, you might want to look again. In April 2013, 58.6 percent of all working age Americans had a job. But three years ago, in April 2010, 58.7 percent of all working age Americans had a job. Well, you may argue, that is not much of a difference. And that is precisely my point. The percentage of Americans that have a job fell like a rock during the last recession. It dropped from about 63 percent all the way down to below 59 percent, and it has stayed below 59 percent for 44 months in a row. So where is the recovery? This is the first time in the post-World War II era that the employment-population ratio has not bounced back after the end of a recession. So anyone that tells you that we are experiencing an employment recovery is lying to you. Yes, the U.S. economy added 165,000 jobs last month. But it takes nearly that many jobs just to keep up with population growth. The truth is that we are just treading water.
So why has the unemployment rate been going down? Well, it is because the government has been pretending that millions upon millions of unemployed Americans "don’t want jobs" anymore. In fact, an astounding 9.5 million Americans have "left the workforce" since Barack Obama took office.
Some in the mainstream media have started calling them "missing workers". But whatever label you want to use, the reality of the matter is that they are really hurting. They are part of the reason why food stamp enrollment has soared from 32 million to more than 47 million while Barack Obama has been in the White House.
If you still believe that the employment market is getting better, just look at the following numbers. The percentage of working age Americans with a job has been sitting at about the same level for four years in a row…
April 2008: 62.7 percent
April 2009: 59.8 percent
April 2010: 58.7 percent
April 2011: 58.4 percent
April 2012: 58.5 percent
April 2013: 58.6 percent
So why is everyone getting so excited over the latest numbers? When you step back and look at what has happened to the employment-population ratio over the past decade it really is quite horrifying…
Yes, I suppose that we should be thankful that the percentage of Americans with a job has not continued to decline over the past few years. Unfortunately, the next major wave of the economic collapse is rapidly approaching and that is going to make our employment crisis far worse.
A recovery was supposed to already happen by now. Now we are running out of time before the next major downturn strikes.
And things have been particularly hard for our young people. Even if our young people do go to college, there is a very good chance that good jobs will not be waiting for them once they graduate.
According to Accenture’s 2013 College Graduate Employment Survey, 41 percent of all Millennials who graduated from college during the past two years are working in jobs that actually do not require a college degree.
And a different survey conducted a while back found that 53 percent of all college graduates under the age of 25 are either unemployed or underemployed.
Perhaps you have noticed this. Perhaps you have noticed that there seems to be large numbers of young people that are living with their parents or that can’t seem to get their lives started.
It is because the economy is not producing enough jobs for them.
We have shipped millions of good jobs overseas, we have replaced millions of jobs with technology, and we have created an economic environment that is murdering our small businesses.
Sadly, the future does not look bright for the American worker. The big corporations that dominate our society are feverishly trying to increase profits by getting rid of as many "expensive" American workers as possible. That is one of the reasons why corporate profits as a percentage of GDP are at a record high, but wages as a percentage of GDP are at an all-time low.
At this point there are more than 101 million working age Americans that do not have a job, and that number is going to go a lot higher in the years ahead.
But the financial markets seem to be absolutely thrilled with the present state of affairs. The latest employment numbers caused the Dow to shoot past 15,000 and the S&P 500 to push past 1600.
Of course stocks have become completely and totally divorced from economic reality, but this does happen from time to time and it never lasts forever. At some point there will be a rude awakening.
And I anticipated that we could potentially see the Dow hit 15,000 before it finally crashed. Back in February, I made the following statement…
Right now, everyone seems to be quite giddy about the fact that the Dow is marching toward an all-time high. And I actually do believe that the Dow will blow right past it. In fact, it is even possible that we could see the Dow hit 15,000 before everything starts falling apart.
Well, now we have seen the Dow hit 15,000. But that doesn’t change any of the long-term trends that are absolutely eviscerating our economy.
So enjoy this bubble of false hope while you can
http://theeconomiccollapseblog.com/arch … -years-ago
Statistics: Posted by yoda — Fri May 03, 2013 6:35 pm
View full post on opinions.caduceusx.com
Where Is The Recovery? A Higher Percentage Of Americans Had Jobs Three Years Ago
If you think that the latest employment numbers are good news, you might want to look again. In April 2013, 58.6 percent of all working age Americans had a job. But three years ago, in April 2010, 58.7 percent of all working age Americans had a job. Well, you may argue, that is not much of a difference. And that is precisely my point. The percentage of Americans that have a job fell like a rock during the last recession. It dropped from about 63 percent all the way down to below 59 percent, and it has stayed below 59 percent for 44 months in a row. So where is the recovery? This is the first time in the post-World War II era that the employment-population ratio has not bounced back after the end of a recession. So anyone that tells you that we are experiencing an employment recovery is lying to you. Yes, the U.S. economy added 165,000 jobs last month. But it takes nearly that many jobs just to keep up with population growth. The truth is that we are just treading water.
So why has the unemployment rate been going down? Well, it is because the government has been pretending that millions upon millions of unemployed Americans “don’t want jobs” anymore. In fact, an astounding 9.5 million Americans have “left the workforce” since Barack Obama took office.
Some in the mainstream media have started calling them “missing workers”. But whatever label you want to use, the reality of the matter is that they are really hurting. They are part of the reason why food stamp enrollment has soared from 32 million to more than 47 million while Barack Obama has been in the White House.
If you still believe that the employment market is getting better, just look at the following numbers. The percentage of working age Americans with a job has been sitting at about the same level for four years in a row…
April 2008: 62.7 percent
April 2009: 59.8 percent
April 2010: 58.7 percent
April 2011: 58.4 percent
April 2012: 58.5 percent
April 2013: 58.6 percent
So why is everyone getting so excited over the latest numbers? When you step back and look at what has happened to the employment-population ratio over the past decade it really is quite horrifying…
So exactly what part of that chart are we supposed to get excited about?
Yes, I suppose that we should be thankful that the percentage of Americans with a job has not continued to decline over the past few years. Unfortunately, the next major wave of the economic collapse is rapidly approaching and that is going to make our employment crisis far worse.
A recovery was supposed to already happen by now. Now we are running out of time before the next major downturn strikes.
And things have been particularly hard for our young people. Even if our young people do go to college, there is a very good chance that good jobs will not be waiting for them once they graduate.
According to Accenture’s 2013 College Graduate Employment Survey, 41 percent of all Millennials who graduated from college during the past two years are working in jobs that actually do not require a college degree.
And a different survey conducted a while back found that 53 percent of all college graduates under the age of 25 are either unemployed or underemployed.
Perhaps you have noticed this. Perhaps you have noticed that there seems to be large numbers of young people that are living with their parents or that can’t seem to get their lives started.
It is because the economy is not producing enough jobs for them.
We have shipped millions of good jobs overseas, we have replaced millions of jobs with technology, and we have created an economic environment that is murdering our small businesses.
Sadly, the future does not look bright for the American worker. The big corporations that dominate our society are feverishly trying to increase profits by getting rid of as many “expensive” American workers as possible. That is one of the reasons why corporate profits as a percentage of GDP are at a record high, but wages as a percentage of GDP are at an all-time low.
At this point there are more than 101 million working age Americans that do not have a job, and that number is going to go a lot higher in the years ahead.
But the financial markets seem to be absolutely thrilled with the present state of affairs. The latest employment numbers caused the Dow to shoot past 15,000 and the S&P 500 to push past 1600.
Of course stocks have become completely and totally divorced from economic reality, but this does happen from time to time and it never lasts forever. At some point there will be a rude awakening.
And I anticipated that we could potentially see the Dow hit 15,000 before it finally crashed. Back in February, I made the following statement…
Right now, everyone seems to be quite giddy about the fact that the Dow is marching toward an all-time high. And I actually do believe that the Dow will blow right past it. In fact, it is even possible that we could see the Dow hit 15,000 before everything starts falling apart.
Well, now we have seen the Dow hit 15,000. But that doesn’t change any of the long-term trends that are absolutely eviscerating our economy.
So enjoy this bubble of false hope while you can.
It will not last much longer.
View full post on The Economic Collapse
American • The Tailwinds Pushing the U.S. Dollar Higher
The Tailwinds Pushing the U.S. Dollar Higher
March 27, 2013
If we shed our fixation with the Fed and look at global supply and demand, we get a clearer understanding of the tailwinds driving the U.S. dollar higher.
I know this is as welcome in many circles as a flashbang tossed on the table in a swank dinner party, but the U.S. dollar is going a lot higher over the next few years. For a variety of reasons, many observers expect the dollar to decline against other currencies and gold, the one apples-to-apples measure of a currency’s international purchasing power.
The tailwinds pushing the dollar higher are less intuitively appealing than the reasons given for its coming decline:
1. The Federal Reserve printing another trillion dollars (expanding its balance sheet) will devalue the dollar because money supply is expanding faster than the real economy.
2. The Fed is printing money with the intent of devaluing the dollar to make U.S. exports more competitive globally and thereby boost the domestic economy.
Let’s examine each point.
1A. If much of the Fed’s new money ends up as bank reserves, it is "dead money" and not a factor in the real economy. Fact: money velocity is tanking:
1B. Money is being destroyed by deleveraging and writedowns. This is taking money out of the real economy while the Fed’s new money flows to banks.
1C. The purchasing power of the dollar is set by international supply and demand, not the Fed’s balance sheet or the domestic money supply.
As for point 2:
2A. Exports are 13% of the economy. A stronger dollar would reduce the cost of oil, helping 100% of the economy, including exporters. Why would the Fed damage the entire economy to boost exports from 13% to 14% of the domestic economy? It makes no sense.
2B. Most U.S. exports are either must-have’s (soybeans, grain, etc.) that buyers will buy at any price because they need to feed their people (and recall that agricultural commodities often fluctuate in a wide price band due to supply-demand issues, so if they rise 50% due to a rising dollar, it’s no different than price increases due to droughts) or they are products that are counted as exports but largely made with non-U.S. parts.
How much of the iPad is actually made in the U.S.? Basically zero. Is it counted as an export? Yes. How much of a Boeing 787 airliner is actually manufactured in the U.S.? Perhaps a third. Sorting out what is actually made in the U.S. within complex corporate supply chains is not easy, and the results are often misleading.
2C. Many exports are made and sold in other countries by U.S. corporations, and so the sales are booked in the local currency. The dollar could rise or fall by 50% and most of the U.S. corporate supply chain and sales would not be affected because many of the goods and services are sourced and sold in other nations’ currencies. The only time the dollar makes an appearance is in the profit-loss statement at home.
Americans tend not to know that up to 75% of U.S. corporations’ revenues are generated overseas, in currencies other than the dollar. This may be part of Americans’ famously domestic-centric perspective.
2D. Most importantly, the American Empire needs to control and issue the global reserve currency. The Fed is a handmaiden to the Empire; the Fed’s claims of independence and its "dual mandate" are useful misdirections.
Some analysts mistakenly believe that Fed policies are aimed at boosting the relatively modest export sector (which we have already seen is a convoluted mess of globally supplied parts, sales in other currencies, etc.) from 13% to 14% of the domestic economy.
This overlooks the fact that the most important export of the U.S. is U.S. dollars for international use. I explained some of the dynamics in Understanding the "Exorbitant Privilege" of the U.S. Dollar (November 19, 2012) and What Will Benefit from Global Recession? The U.S. Dollar (October 9, 2012).
Which is easier to export: manufactured goods that require shipping ore and oil halfway around the world, smelting the ore into steel and turning the oil into plastics, laboriously fabricating real products and then shipping the finished manufactured goods to the U.S. where fierce pricing competition strips away much of the premium/profit?
Or electronically printing money and exchanging it for real products, steel, oil, etc.?
I think we can safely say that creating money out of thin air and "exporting" that is much easier than actually mining, extracting or manufacturing real goods. This astonishing exchange of conjured money for real goods is the heart of the "exorbitant privilege" that accrues to the issuer of the global reserve currency (U.S. dollar).
It’s important to put the Fed’s $3 trillion balance sheet in a foreign-exchange (FX) and global perspective:
- The FX market trades $3 trillion a day in currencies.
- Global financial assets are estimated at around $210 trillion. The Fed’s balance sheet is 1.5% of global assets.
The key to understanding the dollar and Triffin’s Paradox is that as the global reserve currency, the dollar serves both domestic and international markets. Of the two, the more important market is the international one.
To act as the global reserve currency, a currency must be exported in sufficient size to facilitate the gargantuan trade in a $60 trillion global GDP/ $210 trillion global economy. There are only two ways to export enough currency to be remotely useful:
1. Run massive trade deficits, i.e. import goods and export dollars.
2. Loan massive quantities of dollars to nations that will place the dollars in international circulation.
The famous Marshall Plan that helped Western Europe rebuild its economies was just that: a series of large loans of dollars to dollar-starved economies. This was necessary because the U.S. was running trade surpluses in the postwar era and was therefore not exporting dollars.
This leads to a startling but inescapable conclusion: no exporting nation can issue the global reserve currency. That eliminates the European Union, China, Japan, Russia and every other nation running surpluses or modest deficits.
Many commentators are drawing incorrect conclusions from various attempts to bypass the dollar in settling trade accounts. For example, China is setting up direct exchanges where buyers and sellers can exchange their own currencies for renminbi, eliminating the need for intermediary dollars.
This is widely interpreted as the death knell for the dollar. But this misses the entire point of the reserve currency, which is that it must be available in quantity for everyone to use, not just those doing business with the domestic economy of the issuing nation.
Here’s a practical example. The $100 bill is "money" everywhere in the world, recognizable as both a medium of exchange for gold, other currencies, goods and services, and as a store of value that is priced transparently (often on the black market). For the Chinese renminbi/yuan to replace the dollar as the global reserve currency, China would need to "export" enough currency to grease trade large and small worldwide, and enough electronic money to act as reserves that support domestic lending in nations holding the reserve currency.
This is yet another poorly understood function of the reserve currency: it acts as foreign exchange reserves, backing up the holder’s currency, and as reserves in its central bank that act as collateral for its domestic issuance of credit.
In other words, the U.S. has issued and exported trillions of dollars because this is the necessary grease for global trade, currency stability and issuance of credit by nations holding dollars. The U.S. didn’t run massive trade deficits by accident: it needed to "export" more dollars as the volume of global trade expanded.
Issuing credit and loans in dollars wasn’t enough, so the U.S. exported dollars in exchange for commodities and goods.
For China to issue the global reserve currency, it would have to decouple the yuan from the U.S. dollar and start running deficits on the order of $500 billion a year.
Many observers think China is preparing to back its currency with gold, and they mistakenly conclude (yet again) this would be the death knell for the dollar. But they haven’t thought through how currencies work: their value is ultimately set like everything else, by supply and demand.
In an export-dependent country like China, a gold-backed currency would not be exported in quantity–it wouldn’t be "exported" at all, because China "imports" others’ currencies in exchange for goods.
Assuming some of the gold-backed currency was exported, it would quickly end up in savings accounts or bank vaults, being a proxy for gold. There will be none available for facilitating trade in the $210 trillion global economy.
This dual nature of money trips up many analysts. Establishing a currency that is "as good as gold" but not exporting it in quantity means it will be hoarded as a store of value and be unavailable to facilitate trade. Money has to act both as a store of value and as a means of exchange.
This is why U.S. $100 bills are carefully stored in plastic in distant entrepots of the world, safeguarded as real money, available as a store of value and as a means of exchange.
Currencies can be exchanged in a Forex (FX) marketplace, but the reserve currency is the "winner take all" in the real world. If you hold out an equivalent sum in various currencies around the world, the trader in the stall will likely choose the $100 bill because he is not sure of the value of the other funny-money in his home currency and he knows he can easily exchange the $100 everywhere.
The other currencies might trade on the FX market at some percentage of the dollar, but in the real world they are effectively worthless because there isn’t enough of them available to establish a transparent, truly global market. To do that, a nation has to export monumental quantities of their currency and operate their domestic economy in such a fashion that the currency is recognized as being a store of value.
In a very real sense, every currency is a claim not on the issuing central bank’s balance sheet but on the entire economy of the issuing nation.
All this leads to two powerful tailwinds to the value of the dollar. One is simply supply and demand: as the global economy slides into recession, trade volumes decline, and the U.S. deficit shrinks. (It’s already $250 billion less than was "exported" in 2006.) That will leave fewer dollars available on the global market.
In the case of the U.S., which exports large quantities of what the world needs (grain, soy beans, etc.) while buying mostly stuff that is falling in price in recession (oil, surplus manufactured goods, etc.), the trade deficit could decline significantly. (It is currently around $40 billion a month.)
And what does a declining trade deficit mean? It means fewer dollars are being exported. The global GDP is about $60 trillion, of which about 25% is the U.S. economy. Into this vast sea of trade, the U.S. "exports" about $500 billion in U.S. dollars via the trade deficit. Put in perspective, it isn’t that big compared to the machine it is lubricating.
So what happens when there are fewer dollars being exported? Demand for existing dollars goes up, pushing the "price/cost" of dollars up–basic supply and demand.
The second tailwind is the demand for dollars from those exiting the euro and yen. The abandonment of the euro is already visible in these charts, courtesy of Market Daily Briefing: Peak Euros.
We can anticipate this desire to transfer euros and yen into dollars will only increase as those currencies depreciate. Let’s say, just as an example, $5 trillion in euros starts chasing $1 trillion in available U.S. dollars. What will that do to the value of the dollar?
Some ask why those selling euros won’t buy Chinese yuan. Where are you going to find $1 trillion in yuan? It isn’t even convertible on an open market, and since China is an importer of currency, there isn’t 1 trillion yuan floating around the global marketplace to buy even if you wanted to.
Many people scoff when I suggest the dollar could rise 50% (i.e. the DXY dollar index could climb from its current level around 80 to 120) or even 100% (DXY = 160) in the years ahead. I know it’s the highest order of sacrilege to even murmur this, but if global demand for dollars picks up, the Fed isn’t printing nearly enough to dent the rise in the dollar.
As a lagniappe outrage, consider the domestic fallout from a decline in U.S. stocks and the U.S. economy. The Fed’s precious horde of political capital will leak away, and its ability to print more money will be proscribed by political resistance and a loss of faith in the Fed’s claimed omnipotence.
Any reduction in Fed printing would only limit the quantity of dollars available to global buyers, further pushing up its price on the open market.
http://www.oftwominds.com/blog.html
Statistics: Posted by yoda — Wed Mar 27, 2013 6:11 am
View full post on opinions.caduceusx.com
Education And Science • The higher education racket gets long in the tooth:
The higher education racket gets long in the tooth: For-profits account for 47 percent of defaults but make up only 13 percent of total enrollments.
Posted by mybudget360 in college, student debt, student loans
Bubbles do not burst in a nice orderly fashion. In fact, incredible graft enters the system where it becomes obvious to any bystander that the bubble is going to burst. This is the case for higher education. The US has over 4,000 colleges and universities, with many of them operating like glorified paper mills. Similar to the apex of the housing bubble where we heard about no income buyers qualifying for hundreds of thousands of dollars in mortgage loans, we now have many Americans diving into for-profit institutions that operate at the level of paper mills for tens of thousands of dollars of non-dischargeable student debt. Not only is the for-profit sector a sign of the worm turning for higher education, but many other institutions have jacked up prices to levels that are simply unjustified. This bubble is getting ripe for the picking.
For-profits show dramatic share of defaults
One of the more obvious points to spot out is the incredible default rates at for-profits:
Source: US Dept of Ed
While for-profit institutions only make up 13 percent of total student enrollment they make up a stunning 47 percent of student loan defaults. This of course is incredibly high and many in the for-profit industry talk about giving access to poor Americans hence the high default rates. This is similar to the nonsense argument made with subprime loans. Well of course defaults are higher because we want to give access to the average American making $25,000 a year a $500,000 loan to buy that McMansion. Of course these people are comfortable lending out other people’s money while they would never in their wildest dreams make that loan with their own capital. If that is the case, then give students more access to low cost state run schools but that is not the case. Even state schools are increasing their tuition rates dramatically:
Average tuition at public four-year schools is up a whopping 72 percent since 2000 however the typical earning for young college graduates has fallen by 14.7 percent. How is that justified? Many are now vocal about the higher education bubble. Mark Cuban, billionaire owner of the Dallas Mavericks has this to say:
“(Blog Maverick) For the smart student who cares about getting their money’s worth from college, the days of one school for four years are over. The days of taking on big debt (to the tune of 1 TRILLION DOLLARS as I write this ) are gone. Going to a 4 year school is supposed to be the foundation from which you create a future, not the transaction that crushes everything you had hoped to do because you have more debt than you could possibly pay off in 10 years. It makes no sense.
Which in turn means that 4 year schools that refuse to LOWER their tuition are going to see their enrollment numbers decline. It just doesn’t make sense to pay top dollar for Introduction to Accounting , psychology 101, etc.”
This is very true. Why would someone saddle themselves with unbelievable levels of debt for basic knowledge that can be learned for very little money? Take a look at college tuition measured in context of inflation:
The above also accounts for the once in a lifetime housing bubble and college far outstrips any gains seen in that sector. Student debt now stands at well over $1 trillion. In 2011 there were was someone in the media even trying to discount that there was even $1 trillion outstanding. This was posted in late 2011:
“(Reuters) This chart shows the total stock of credit-card and student-loan debt, up to the second quarter of 2011. The most recent figures show total credit-card debt at $690 billion, and total student-loan debt at $550 billion. It is not true that Americans now owe more on student loans than on credit cards, and total student-loan debt isn’t even close to $1 trillion.”
As it turns out, this “expert” was incredibly wrong. Official data both from the Fed and the government now shows that combined public and private student debt is well over $1 trillion. Similar to the housing bubble where near the apex people were trying to downplay the large levels of debt, we see similar arguments made today for the student debt bubble. Yet it is getting more and more obvious that this thing is going to pop given the high levels of default rates with the riskiest loans. The problem is, there is a giant portion of risky loans in that $1 trillion pool.
http://www.mybudget360.com/higher-educa … #more-4632
Statistics: Posted by yoda — Fri Feb 15, 2013 1:44 pm
View full post on opinions.caduceusx.com
American • Federal Reserve Vice-Chair admits unemployment rate higher
Federal Reserve Vice-Chair admits unemployment rate higher than official figures
February 14, 2013 By Andrew Moran
Speaking at the “A Trans-Atlantic Agenda for Shared Prosperity” conference sponsored by the AFL-CIO, Friedrich Ebert Stiftung and the IMK Macroeconomic Policy Institute in Washington on Monday, Federal Reserve Vice-Chair Janet Yellen admitted in her speech that the official unemployment rate of 7.9 percent is actually incorrect because of a variety of factors.
According to Yellen, who is considered a potential successor to Fed Chairman Ben Bernanke, stated that the unemployment rate is actually 14.4 percent. This number includes about 800,000 discouraged workers who have given up seeking employment and roughly eight million workers who are in part-time jobs but would prefer to work a full-time job.
“The unemployment rate now stands at 7.9 percent. To put this number in perspective, while that’s a big improvement from the 10 percent reached in late 2009, it is now higher than unemployment ever got in the 24 years before the Great Recession,” said Yellen in her prepared remarks.
“Moreover, the government’s current estimate of 12 million unemployed doesn’t include 800,000 discouraged workers who say they have given up looking for work. And, as exhibit 6 shows, 8 million people, or 5.6 percent of the workforce, say they are working part time even though they would prefer a full-time job. A broader measure of underemployment that includes these and other potential workers stands at 14.4 percent.”
The former president and CEO of the Federal Reserve Bank of San Francisco also conceded that the poverty rate is a lot higher than it had been for the past decade and presently stands at 15 percent of the general population in the United States. The results of the recession, says Yellen, have been consequential for these individuals.
“Even those today who are fortunate enough to hold jobs have seen their hourly compensation barely keep pace with the cost of living over the past three years, while labor’s share of income – as measured by the percent of production by nonfinancial corporations accruing to workers as compensation – remains near the postwar low reached in 2011,” stated Yellen. “It will be a long road back to a healthy job market. It will be years before many workers feel like they have regained the ground lost since 2007.”
Despite Yellen’s admission that the federal government’s unemployment numbers are suppressed, her figures, according to other economists, are several percent lower than other projections. The unofficial unemployment rate is seen at 22.5 percent.
Indeed, the unemployment statistics have been revised since the administration of President Lyndon Baines Johnson. Officials either insert or delete specific equations, workers and numbers to match their public policies and provide the nation’s citizens false data to generate support from voters.
Economic Collapse News reported in October that John Williams of ShadowStats.com noted that if the federal government measured unemployment the way the U.S. did during the time of the Great Depression then the numbers would be dramatically higher.
Nevertheless, Yellen also admitted that even though the Federal Reserve has taken numerous actions, like implementing low interest rates, which she pointed out hasn’t done much to increase spending, the recovery has been slow.
“After a lengthy recession that imposed great hardships on American workers, the weak recovery has made the past five years the toughest that many of today’s workers have ever experienced,” added the former Chairperson of the Council of Economic Advisors in the President Bill Clinton administration.
In December, the Fed confirmed that it will keep key short-term interest rate at or near zero percent as long as the unemployment rate remains above 6.5 percent. However, it all depends on how the U.S. economy gets to that unemployment level. If the jobless number, for instance, dips below 6.5 percent because workers are exiting the labor force then Bernanke would still not raise rates.
Peter Schiff, president of Euro Pacific Capital, stated in a video at the time that Bernanke is throwing the U.S. dollar over the currency cliff with his policies.
“The only variable is: how long can Ben Bernanke get away with lying and pretending there is no inflation? How much inflation can he create?” asked Schiff in his video. “By expanding your balance sheet by over $1 trillion a year, that’s massive inflation that is the definition of inflation. He is inflating the money supply. Prices are going to rise in response to that. The question is: how long can he convince the world that prices aren’t rising, despite all the inflation he is creating?”
http://economiccollapsenews.com/2013/02 … l-figures/
Statistics: Posted by yoda — Thu Feb 14, 2013 6:08 pm
View full post on opinions.caduceusx.com
Gold and Silver • Re: Why Isn’t Gold Higher?
Why isn’t gold higher?
Manipulation.
Statistics: Posted by Deo Vindice — Tue Jan 29, 2013 10:07 am
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Gold and Silver • Why Isn’t Gold Higher?
Why Isn’t Gold Higher?
Hint: Because it’s the Credit Default Swap of the Next Financial Crisis
Why isn’t gold higher? Two of the three reserve currencies of the world—the dollar and the yen—are on a relentless race to the bottom, and only recently have the Europeans figured out that they’d better start kicking the euro down, before they price themselves out of the global markets.
With this general fiat currency devaluation, you would think that gold would be much-much higher than it is now.
But gold isn’t higher—it’s drifting. Consider this chart of gold, over the last decade:
Gold was on a relentless climb after the 2008 Global Financial Crisis—with good reason: The markets collectively deduced that the central banks of the world would devalue their currencies, in order to get out from under the mountain of private, consumer and sovereign debt.
Individuals might have decided to buy gold for different reasons—a hedge against volatile equities markets, worries about a run on sovereign debt instruments, etc.—but collectively the market participants all acted the same way: They bought gold as a hedge. (In fact, gold has no value except as a hedge.)
Thus the steady climb in the price of gold from $750 to $1900 in a little less than three years.
So far, so good.
But then starting in September of 2011, gold prices zoned out between $1,900 and $1,600. Instead of continuing on to $2,000 an ounce, $3,000, Infinity and Beyond, gold just drifted like a lobotomized patient spending some quiet time in a rubber room.
Gold has not outperformed anything since September 2011.
The conspiracy-minded claim it’s a conspiracy, natch. The Rothschilds, the CIA, and the little green men from Mars are all conspiring to down-price gold, to the detriment of the gold-buggers.
But I’m not one for conspiracies, not since I learned in grade school that a secret between two people is never a secret for long, and a secret between three or more people is no secret at all—just ask Lance Armstrong. If there’s a conspiracy, someone’s bound to talk. Since no one’s talking, my guess is, no one in any position of power has any more clue as to this drifting in the price of gold than any arm-chair conspiracy weenie.
So if we’re discounting conspiracies, that leaves us with the numbers—and the markets.
And an idea I have: What if the price of gold is drifting not because the markets don’t trust the world’s reserve currencies to continue to devalue, but because the market doesn’t trust gold?
Which reminds me of credit default swaps.
(Yes, I know: My brain seems fairly odd in its associations. Bear with me as I untangle the mess in my head.)
Remember CDS’s? They were essentially insurance contracts taken out to hedge against a particular bond defaulting. In the run-up to the Global Financial Crisis of 2008, credit default swaps rose in value—sometimes exponentially—as investors concluded that a lot of the triple-A rated bonds were actually junk, and would soon default like junk.
Credit default swaps were the insurance—the hedge—against exactly what happened in 2008: Bonds threatened to default, during the Global Financial Crisis. So the CDS’s insuring those bonds rose in value like a mofo—
—until suddenly, they didn’t: CDS’s stopped rising in value just when the markets collectively realized that the counterparties to those CDS contracts might not be able to pay up.
Because remember, an insurance policy is only as good as the counterparty’s ability to pay it off.
When all those mortgage backed bonds started to default in 2008, all those credit default swaps started to rise in value and/or needed to be paid off. This huge exposure to credit default swaps sent insurance giant AIG to bankruptcy, and credibly threatened to wipe out the entire global financial system in September of ’08.
When that point came, credit default swaps no longer were rising in price. Rather, they were jagging up and down, like the monitor readings of a heart-attack patient—which made perfect sense: Some market participants expected the CDS’s they were holding to be paid in full, while others weren’t sure that AIG or whatever other counterparty they were working with would be able to honor the CDS’s once the bonds they were insuring went bust.
So price discovery of the CDS’s was impossible while the crisis was raging. The prices of credit default swaps ran up relentlessly, as it became obvious that what they were hedging again—bonds defaulting—was going to happen. But then CDS prices went jagged immediately before and during the crisis itself, when no one was sure if the contracts would be honored.
In its shape, it’s identical to what’s been happening with gold: A relentless climb in price during the run-up period to the crisis—then jagged drifting right before the crisis.
We all know and understand what’s going on with the global economies and the fiat currency system: The global overindebtedness is forcing central banks around the world to devalue their currencies, so as to make the debt burden less onerous.
Many people—and I happen to be one of them—believe that this policy will lead to an inflationary crisis, which will spiral into an uncontrollable hyperinflation event. The key assumption in this scenario is that the only cure for runaway inflation—raising interest rates higher, and hard, like Paul Volcker did in ’79—will never be implemented by the world’s central banks, because they believe (with some justification) that higher rates will shove the global economies into a deflationary death spiral.
Thus a spike in inflation will bleed into hyperinflation, and by the time the central banks wake up and raise interest rates to stop it, it’ll be too late.
In such a case, gold would be the perfect hedge against inflation and eventual hyperinflation. In fact, even better than a hedge, gold would be the perfect investment, an investment that would outpace all other asset classes, because market participants would anticipate this inflation scenario, and thus pile into gold so fast and in such numbers that gold prices would spike parabolically, far outpacing the fiat currency devaluation.
Since everyone with any sense realizes that this is the endgame of the current race to the bottom, gold ought to be rising dramatically.
But that is not happening. Gold rose steady and strong from 2000 through September 2011—but since then it’s been drifting jaggedly.
So why would gold—which is an actual, physical commodity—be acting like credit default swaps did right before the 2008 crisis?
For the same reason: Gold buyers don’t trust the counterparties selling gold.
Because after all, most gold markets are paper markets, not bullion markets.
The various gold ETF’s, gold certificates, etc.—they are all based on the trustworthiness of the counterparty issuing the paper. The gold bullion is stored in vaults, and paper receipts against it are being issued.
But as more than one precious metals commentator has pointed out, there is more paper issuance of gold than actual gold bullion.
What does this mean? It means that the global precious metals markets are essentially a game of musical chairs, with far fewer seats than players—far less gold than gold holders.
And market participants collectively know this. Which is why they don’t trust their counterparties. Which is why gold isn’t rising like a shot.
There is only one market in gold, not two. There is no way to segregate gold bullion holders from gold certificate holders, and thus create two markets, one for the real thing, one for the paper thing.
Thus the current spot price of gold is reflecting market uncertainty as to who has actual gold, and who has worthless paper certificates of gold.
Do recall: The prices of credit default swaps quickly reached their market prices after the 2008 crisis had passed. They reached those actual market prices once the insolvent counterparties, like AIG, had been identified and isolated.
But before and during the crisis? When it wasn’ clear which credit default swap would be honored and which wouldn’t? CDS prices were jagged—like gold’s is today.
In the long run, assuming that central banks don’t manage to raise rates in time to prevent high- or hyperinflation, gold prices will go parabolic. But between now and then, gold prices will continue to drift, because the markets don’t really know whose gold is real, and whose is worthless paper.
http://gonzalolira.blogspot.ca/2013/01/ … igher.html
Statistics: Posted by yoda — Sun Jan 27, 2013 5:07 pm
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Gold and Silver • Catalysts That Will Drive Silver Prices Higher
Catalysts That Will Drive Silver Prices Higher
http://etfdailynews.com/2013/01/21/cata … es-higher/
January 21st, 2013 Jeff Uscher:
Silver prices are up nearly 8% in the past couple weeks as investors increasingly load up on the white metal.
In fact, the U.S. Mint has temporarily suspended sales of its 2013 American Eagle silver coins because it has none left.
Reuters reported today (Friday) that the Mint plans to restart sales in the last week of January after it has had a chance to restock.
The U.S. Mint generally sees a big influx of demand when it releases new coins at the beginning of the year. This year, however, investors seeking a safe haven for their money added to the usual collector demand leaving the Mint’s vaults bare.
“It is easy to infer that some element of the fear trade may be at play,” Joni Teves, an analyst at UBS AG in London, wrote today in an e-mailed report cited by Bloomberg News. “We view the chunky sales of American Eagle coins more a function of seasonality than anything else. It is important to keep an eye on U.S. coin sales in the coming months to see if volumes remain elevated as the debt ceiling showdown plays out.”
Coins Not the Only Silver Play to Soar
The news from the Mint coincides with a report that the iShares Silver Trust ETF (NYSEARCA:SLV) saw the biggest inflows of any exchange-traded fund (ETF) this week, adding $600 million to its assets under management.
IShares manager BlackRock (NYSE:BLK) confirmed to Bloomberg that this was the largest increase in the silver ETF’s assets ever.
Demand for silver as a safe haven comes amid increased turmoil over the debt ceiling in the U.S., the ongoing crisis in Europe and an aggressive attempt to create inflation in Japan.
Precious metals investors have also been disappointed by the performance of gold in recent weeks and may be looking for an alternative investment. Certainly the gold/silver ratio has been in decline since late December, falling from 56 to nearly 53, a decline of about 5%.
All these factors combine for investor sentiment that’s bullish for silver prices.
More Catalysts for Higher Silver Prices
Another major reason for higher silver prices is the outlook for improved economic activity, particularly in China, which reported better than expected quarterly gross domestic product (GDP) numbers on Friday.
“With silver, you can benefit from both sides: its safe-haven status and the fact that it’s also an industrial commodity,” Frederique Dubrion, the Geneva-based president and chief investment officer of Blue Star Advisors SA told Bloomberg. ”Given some positive leading indicators, especially in the U.S., investors would probably prefer turning to silver rather than to gold.”
In that sense, silver has a more direct link to global industrial activity than gold. As the global economy recovers, demand for silver will rise at a time when supplies are tight because of financial demand from investors looking for a safe haven.
Silver is used in a number of automotive applications, and global automakers have forecast increased demand for cars and light trucks in the world’s major market, including China and the United States. This should provide some underpinning in the demand for silver in 2013.
So, whether you are optimistic about the economy or pessimistic about how Congress will handle the debt ceiling, given the metal’s dual roles as both an industrial commodity and as a store of value, you should be betting on higher silver prices.
Related Tickers: iShares Silver Trust (NYSEARCA:SLV), ProShares Ultra Silver (NYSEARCA:AGQ), SPDR Gold Trust (NYSEARCA:GLD), Silver Wheaton Corp. (NYSE:SLW), ETFS Silver Trust (NYSEARCA:SIVR).
Written By Jeff Uscher For Money Morning
We’re in the midst of the greatest investing boom in almost 60 years. And rest assured – this boom is not about to end anytime soon. You see, the flattening of the world continues to spawn new markets worth trillions of dollars; new customers that measure in the billions; an insatiable global demand for basic resources that’s growing exponentially; and a technological revolution even in the most distant markets on the planet.And Money Morning is here to help investors profit handsomely on this seismic shift in the global economy. In fact, we believe this is where the only real fortunes will be made in the months and years to come
Statistics: Posted by DIGGER DAN — Wed Jan 23, 2013 7:28 pm
View full post on opinions.caduceusx.com
Gold and Silver • Catalysts That Will Drive Silver Prices Higher
Catalysts That Will Drive Silver Prices Higher
http://etfdailynews.com/2013/01/21/cata … es-higher/
January 21st, 2013 Jeff Uscher:
Silver prices are up nearly 8% in the past couple weeks as investors increasingly load up on the white metal.
In fact, the U.S. Mint has temporarily suspended sales of its 2013 American Eagle silver coins because it has none left.
Reuters reported today (Friday) that the Mint plans to restart sales in the last week of January after it has had a chance to restock.
The U.S. Mint generally sees a big influx of demand when it releases new coins at the beginning of the year. This year, however, investors seeking a safe haven for their money added to the usual collector demand leaving the Mint’s vaults bare.
“It is easy to infer that some element of the fear trade may be at play,” Joni Teves, an analyst at UBS AG in London, wrote today in an e-mailed report cited by Bloomberg News. “We view the chunky sales of American Eagle coins more a function of seasonality than anything else. It is important to keep an eye on U.S. coin sales in the coming months to see if volumes remain elevated as the debt ceiling showdown plays out.”
Coins Not the Only Silver Play to Soar
The news from the Mint coincides with a report that the iShares Silver Trust ETF (NYSEARCA:SLV) saw the biggest inflows of any exchange-traded fund (ETF) this week, adding $600 million to its assets under management.
IShares manager BlackRock (NYSE:BLK) confirmed to Bloomberg that this was the largest increase in the silver ETF’s assets ever.
Demand for silver as a safe haven comes amid increased turmoil over the debt ceiling in the U.S., the ongoing crisis in Europe and an aggressive attempt to create inflation in Japan.
Precious metals investors have also been disappointed by the performance of gold in recent weeks and may be looking for an alternative investment. Certainly the gold/silver ratio has been in decline since late December, falling from 56 to nearly 53, a decline of about 5%.
All these factors combine for investor sentiment that’s bullish for silver prices.
More Catalysts for Higher Silver Prices
Another major reason for higher silver prices is the outlook for improved economic activity, particularly in China, which reported better than expected quarterly gross domestic product (GDP) numbers on Friday.
“With silver, you can benefit from both sides: its safe-haven status and the fact that it’s also an industrial commodity,” Frederique Dubrion, the Geneva-based president and chief investment officer of Blue Star Advisors SA told Bloomberg. ”Given some positive leading indicators, especially in the U.S., investors would probably prefer turning to silver rather than to gold.”
In that sense, silver has a more direct link to global industrial activity than gold. As the global economy recovers, demand for silver will rise at a time when supplies are tight because of financial demand from investors looking for a safe haven.
Silver is used in a number of automotive applications, and global automakers have forecast increased demand for cars and light trucks in the world’s major market, including China and the United States. This should provide some underpinning in the demand for silver in 2013.
So, whether you are optimistic about the economy or pessimistic about how Congress will handle the debt ceiling, given the metal’s dual roles as both an industrial commodity and as a store of value, you should be betting on higher silver prices.
Related Tickers: iShares Silver Trust (NYSEARCA:SLV), ProShares Ultra Silver (NYSEARCA:AGQ), SPDR Gold Trust (NYSEARCA:GLD), Silver Wheaton Corp. (NYSE:SLW), ETFS Silver Trust (NYSEARCA:SIVR).
Written By Jeff Uscher For Money Morning
We’re in the midst of the greatest investing boom in almost 60 years. And rest assured – this boom is not about to end anytime soon. You see, the flattening of the world continues to spawn new markets worth trillions of dollars; new customers that measure in the billions; an insatiable global demand for basic resources that’s growing exponentially; and a technological revolution even in the most distant markets on the planet.And Money Morning is here to help investors profit handsomely on this seismic shift in the global economy. In fact, we believe this is where the only real fortunes will be made in the months and years to come
Statistics: Posted by DIGGER DAN — Wed Jan 23, 2013 7:28 pm
View full post on opinions.caduceusx.com