Tag Archives: economy

Businesses Take Negative Outlook After Federal Reserve Raises Rates

An interest rate hike earlier this month looks to negatively affect some businesses as they are least prepared to handle it.

In the first increase in rates since 2006, the Federal Reserve raised interest rates by 25 basis points on loans earlier this month. While some tout the move as being a good sign for the economy, a recent survey of companies by Standard & Poor shows numerous companies with low credit ratings and negative outlooks in a recent survey.

As part of the Federal Reserve’s increase in rates, the bank announced its intention to gradually increase the rate further as economic conditions permit.

It could take a few years for the current increase to impact companies as they look to refinance existing debt or take out new loans.

The number of companies described as “weakest-links” by S&P came in at 195, the highest number since March of 2010. The bulk of the weakness comes from the oil and gas and financial sectors, accounting for 34 and 33 of the 195 respectively.

A two year slide in the price of oil has caused a significant decrease in domestic drilling for oil, with companies such as Pioneer Natural Resources already cutting 250,000 jobs with additional layoffs expected. CEO Scott Sheffield stated in an email the company has plans to trim 20 to 30 percent of it’s budgets in 2016, a reality which can be seen across the oil and gas industry.

Bond markets are also a factor, combining with the interest rate hike and the projected profit weakness in a number of sectors. A measure of the amount of risk priced into bonds, known as the U.S. distress ratio, came in at 20.1% in November. This is the highest level for the index since September 2009 when the ratio hit 23.5% according to S&P.

Of the indicators used by S&P, the oil and gas industry accounts for the highest dollar value of distressed debt which comes in at 37% of outstanding debts. The metals, mining and steel industry, while not as consequential in terms of dollar value, is shown to have 72% of its assets as distressed.

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Low Price Of Crude Oil Hits American Foes And Friends

WASHINGTON, December 24, 2015 – Countries heavily dependent on oil exports are losing out on billions of dollars of revenue as crude oil prices continue to decline, placing stress on some countries who conflict with the United States.

Cheap oil hurts revenues for some of our foes and helps some of our friends. The Europeans, South Koreans and Japanese — they’re all winners,” said Robert McNally, who was director for energy in President George W. Bush’s National Security Council and now head of consulting firm the Rapidan Group. “It’s not good for Russia, that’s for sure, and it’s not good for Iran.”

Cheap oil has also had serious consequences for the administration of Venezuelan President Nicolas Maduro, whose socialist party, the United Social Party of Venezuela (PSUV), recently lost control of the government in a landslide. Oil exports account for 90% of the country’s revenues.

Saudi Arabia continues to maintain production rather than cut supply to move prices higher.

The Saudis are instead producing oil at near record levels, making development of new sources such as those in the Arctic, Canadian oil sands, U.S. shale and Brazil’s offshore fields much less viable. Meanwhile the Saudis are battling for market share with neighboring Iraq and regional rival Iran.

The Iranian government is being forced to lower projections, and thus expectations associated with an additional half-million barrels a day allowed once sanctions are lifted in mid-2016. The removal of these sanctions are connected to the deal to limit the country’s nuclear program agreed upon earlier this year.

Additional issues facing the Iranians are connected with their hopes that the lifting of sanctions would allow for international companies to develop their oil and gas resourced, which have been off-limits to foreign firms since the expansion of sanctions in 2012.

Should Iran come out of sanctions, they will face a very different market than the one they had left in 2012,said special envoy and coordinator of international energy affairs for the State Department Amos Hochstein. “They were forced to recede in a world of over $100 oil, and sanctions will be lifted at $36 oil. They will have to work harder to convince companies to come in and take the risk for supporting their energy infrastructure and their energy production.”

Russia is another adversary to the U.S. facing problems as a result of the downward trend in oil prices. Compounded by sanctions imposed by European and U.S. allies, Russian oil production will also be forced to compete with the newly added exports coming out of Iran.

All our calculations were based on the oil price of $50 a barrel,” Putin said, half the expectations from the end of 2014. He added: “I believe we will have to make further adjustments.”

Over the past two years the price of the benchmark West Texas Intermediate grade of crude oil has slipped from $97.63 a barrel in December of 2013 to $37.60 on Wednesday.

While American adversaries are being negatively affected by the price decrease, some allies are also being hurt. The largest sources of U.S. imports are Canada, Mexico and Saudi Arabia. They, along with Brazil and West Africa, are suffering.

There’s no way to quantify whether cheap oil is good for us, because the bad guys lose and good guys win,” Hochstein cautioned. “It doesn’t work that way. There are winners and losers all across the board.”

Around $200 billion of investments in energy have been canceled this year, with energy companies planning to cut another 3 to 8 percent from their investments next year,” explained Saudi Prince Abdelaziz bin Salman al Saud, vice minister of petroleum and mineral resources at a conference in Doha in November. “This is the first time since the mid-1980s that the oil and gas industry will have cut investment in two consecutive years.”

Cuts in investments are also coming in the United States as well. North Dakota has been a major part of the U.S. shale oil boom but has already seen a decrease in drilling rig count from 172 at the beginning of the year to only 65 on Wednesday.

Independent drilling companies are being hit hard by the low prices and as a result banks such as Wells Fargo are taking action to shore up capital reserves in case of delays or even default on loan payments by these companies.

Pioneer Natural Resources, a Texas-based exploration and production firm, plans to trim budgets between 20 and 30 percent in 2016 according to CEO Scott Sheffield in an email. The company expects additional layoff to the 250,000 already let go.

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Federal Reserve Raises Interest Rate for First Time Since 2008

WASHINGTON, December 17, 2015- For the first time since the bottom of the financial crisis in 2008, the Federal Reserve raised interest rates and has signaled its intent for further increases.

“The Fed’s decision today reflects our confidence in the U.S. economy,” Chair Janet Yellen said at a news conference on Wednesday.

The move was welcomed by Wall Street as the Dow Jones Industrial average ended the Tuesday session with a 224 point gain.

“The Fed reaffirmed that the pace of rate hikes would be slow,” James Marple,TD Economics senior economist wrote in a research note. “The Fed’s expectations for rate hikes next year are set alongside a relatively cautious and entirely achievable economic outlook.”

The hike of the key rate of a quarter-point, placing it between 0.25 and 0.5 percent, ends a seven year period of near-zero borrowing rates. This increase is expected to have mild implications for the mortgage and car loan industries as these notes tend to be tied to 10-year U.S. Treasury yields, which will likely remain low as inflation remains below the Fed’s 2% target.

Rates for other forms of loans such as home equity credit lines and consumer credit cards have already begun to rise with Wells Fargo being the first to announce an increase from 3.25 percent to 3.50 percent shortly after the Fed announcement.

Yellen also stated the hike had a defensive component.

“We’ve worried about the fact that with interest rates at zero, we have less scope to respond to negative shocks,” she told the press.

The ability for the Fed to react to future challenges relies on the central bank’s ability to manipulate interest rates and thus allowing the key rate to rise provides for more long term flexibility.

The policy statement released by the Fed cited “considerable improvement” in the job market as well as confidence that inflation would begin to rise. Included in the statement, Fed officials offered predictions that the rate banks charge on overnight loans, the federal funds rate, would end 2016 just over 1 percent.

The central bank’s action was unanimously approved by a 10-0 vote, a victory for Chairwoman Yellen.

Adjustments on other rates included an increase of 0.25 percent to 0.5 percent on the interest paid by banks to hold funds at the Fed and a decrease in the discount rate it charges banks for emergency borrowing from 1 percent down to 0.75 percent.

The moves by the Fed were not seen favorably by all. Long time critic Sen. Rand Paul (R-Ky.) asked “Should the government be involved with setting prices?” and also stated that “What amazes me about the Federal Reserve setting interest rates is that almost to a person, conservative economists in our country will say, wage and price controls are a mistake.”

Austrian economist Peter Schiff told his radio audience, “When the Fed called off the rate hike last time we got a huge bounce in the stock market. The reason the Fed gave was weak global economic conditions. None of those problems have been solved and it can be argued that global economic conditions are weaker now than in August.”

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Report: U.S. Bio-Threat Program May Not Be Capable of Detecting Threats

The U.S. federal government’s BioWatch system was launched shortly after the attacks of September 11, 2001 in an attempt to detect potential biological terrorist attacks. The system’s effectiveness has been criticized by the media in the past, and a new report by the U.S. Government Accountability Office does not encourage renewed faith in the BioWatch program.

The GAO report says there is a lack of reliable information about the current system to determine if it would actually detect a biological attack. Generation-2 is a flawed system that makes it impossible for the GAO to suggest improvements, the report states.

The Washington Post reported that “DHS officials defended BioWatch program, which consists of aerosol collectors deployed in more than 30 cities nationwide that draw in air through filters. The filters are collected and taken to laboratories for analysis to check for the presence of anthrax and other pathogens. The system was first deployed in 2003, in response to Sept. 11 and the anthrax attacks that followed.”

The GAO report stated:

[pull_quote_center]DHS lacks reliable information about BioWatch Gen-2’s technical capabilities to detect a biological attack and therefore lacks the basis for informed cost-benefit decisions about possible upgrades or enhancements to the system.[/pull_quote_center]

“The nation’s ability to detect threats against its security requires judicious use of resources directed toward systems whose capabilities can be demonstrated,” the report also stated.

The report recommends the Department of Homeland Security not be allowed to upgrade or enhance BioWatch until they can establish “technical performance requirements” to help improve the system. The recommendations echo a 2010 report by the Institute of Medicine which said “the BioWatch system requires better testing to establish its effectiveness and better collaboration with public health systems to improve its usefulness.”

The GAO also said any autonomous detection system must minimize false positive readings, meet sensitivity requirements and secure information technology networks. BioWatch currently operates in 31 cities including Washington D.C., New York City, Houston, and Los Angeles.

S.Y. Lee, a DHS spokesman, said the program “remains a critical part of our nation’s defense against biological threats.” Despite continuing to defend BioWatch, the DHS did support the GAO’s recommendations.

In 2014, the DHS also cancelled plans to upgrade the BioWatch system because of concerns of high cost and low effectiveness. The upgrade from Generation 2 to Generation 3 technology was expected to cost $3.1 billion during its first five years of operation.

World Bank Warns Developing Nations On Federal Reserve Interest Rates

The World Bank has issued a new report warning developing nations to prepare for possible financial calamity when the U.S. Federal Reserve raises interest rates. The raise in the interest rates could come by Thursday after the Fed wraps up a policy meeting.

Although the World Bank states that risk is minor for developing countries, the report warns that the risk for negative financial impact could be much worse. The Bank says that if there is significant disruption to capital flow into developing countries, there could be slow economic growth and financial instability.

The BBC writes:

“The new World Bank report gives a number of reasons why developing nations should be able to cope without a great deal of fallout. Notably, the rate rise has been anticipated for a long time and it is likely to be a gradual process. Rates will not be raised rapidly.”

Still, the report warns of a “perfect storm” leading to negative economic impacts for developing countries. The World Bank states:

“Financial conditions are on the cusp of becoming more challenging for merging and frontier market economies as the Fed will soon embark on its first tightening cycle in almost a decade. This will take place in a difficult global context for emerging and frontier market economies: global growth remains subdued, world trade is weak, and commodity prices remain low. Moreover, many emerging and frontier market economies are struggling with weakening growth prospects and lingering vulnerabilities that constrain their policy options.”

The World Bank concludes their report with a stark warning to developing economies, stating that they “may hope for the best during the upcoming tightening
cycle,” but “given the substantial risks involved, they need to prepare for the worst.”

What are your thoughts on the Federal Reserve? Should the Fed raise interest rates?

FEE: Why the $70k Minimum Salary Failed (And Why That’s a Good Thing)

By Max Borders

Experiments in social engineering don’t usually go well. And a lot of people gave Gravity CEO Dan Price a hard time for trying to change the normal salary structure inside his firm so that everyone would have the “happiness salary,” which researchers told us is around $70,000 a year.

The law of unintended consequences kicked in, as it will, and three months on, things aren’t going so well.




As Mark J. Perry and Michael Salzman report,

[quote_box_center]The salary divide between less-experienced employees and more-veteran staff is where the story gets interesting. The Times reported that two of the company’s best employees quit after Price’s raise heard round the world, chafed by a policy that would “double the pay of some new hires” while leaving the paychecks of more-senior employees mostly untouched.

The company’s former financial manager explained it this way: “(Price) gave raises to the people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump.”[/quote_box_center]

Critics were right to point out that this is, more or less, corporate socialism.

[quote_box_center]Similarly, a former Web developer for Gravity Payments was upset at a pay policy that “shackles high performers to less-motivated team members.”

This negative response from more experienced employees to a dramatic pay hike isn’t limited to Gravity Payments and the tech sector. In the same city that Price’s company calls home, a recently enacted minimum wage increase to $15 an hour has some veteran restaurant employees seeing red.[/quote_box_center]

A number of commenters saw this coming, even as Utopians on the progressive left hailed it as the future of American corporate remuneration.

But there was something important about human nature that Price’s cheerleaders were forgetting. Not only would it be hard for the company to afford to pay everyone that much (turns out it was), top performers would feel undervalued due to what moral psychologist Jonathan Haidt calls “fairness as proportionality.”

As Haidt explains,

[quote_box_center]Distributive fairness … refers to how we distribute stuff — benefits as well as burdens. Is everyone getting his fair share and doing her fair share?

But there are two subtypes of distributive fairness — equality (everyone gets the same) and proportionality (all receive rewards in proportion to their inputs; this is sometimes called equity). This simple distinction can help us understand many of today’s most vexing controversies.

Everyone endorses proportionality, but the left simultaneously endorses equality, even when it is in tension with proportionality. The right has no interest in equality for its own sake. Conservatives prefer proportionality, even when it leads to massive inequalities of outcome.[/quote_box_center]

Inside a firm, fairness as proportionality is vital to the corporate order. High performers not only should feel rewarded for their contribution relative to lower performers, such an ethos aligns incentives for upward mobility and higher performance by everyone over time.

Equalizing salaries not only suggests that people’s skills and labor don’t have a labor market value outside the firm, but that everyone’s contribution is essentially the same. The reality is very different of course.

CEO Price’s theory (no pun) had been taken from social scientists with bubble sheets. They had determined the happiest people make around $70,000 per year. Price thought he’d have happy workers if he paid them all the same salary. Happy workers are normally good workers. So it was an experiment worth trying.

But this is so often the problem with social scientists with bubble sheets: their research both lobotomizes and strips away context — or what F. A. Hayek called the circumstances of time and place (and also, in this case, evolutionary wiring).

The $70,000 meme was derived by asking a whole bunch of people if they’re happy. The ones that were making around $70,000 were pretty happy, but each additional dollar in pay didn’t help them become that much happier. So as social scientists will, they lobotomized each person by turning him or her into a plot point which could be aggregated.

Such could then be picked up by every journalist in the world looking to advocate for the social engineering of salaries and wages. But in the process of aggregating people’s opinions, you remove all of the contexts in which they live, work and regard themselves as part of a real and functioning social order that has real, functioning market prices — even for labor.

So people familiar with evolutionary psychology or the work of Hayek would have found Price’s warmed over theory of maximizing “gross domestic happiness” (GDH) silly from the start. But Price formed his idea based on the work of some highly respected academics.

And like many successful people, Price probably felt it was time to signal to the world that he’s not an evil capitalist, but rather a good person. He probably also thought it would work, and that he’d be a trailblazer.

But this leads us to the second vital lesson about free people operating in relatively free markets: It was his experiment to make. The failure, thank goodness, was localized.

As Cord Blomquist is quoted as writing on social media:

[quote_box_center]This is exactly the kind of experimentation that we should praise, not belittle and label as “socialist.” Dan Price did what he thought was right with his own business. He turned out to be wrong, it seems, but that’s how most experiments in the market work. The majority of businesses fail and the majority of business decisions are flawed.

And to be fair to Mr. Price, we live in an era of flat org charts, 20% time, remote work, Zappos-style customer service, and all sorts of other novel schemes. He was emboldened by these things and thought his radically high pay hikes would result in a company with happier and more productive employees.

Are there flaws with that thinking? For sure, but you can see how he might have thought he was on to something revolutionary.

Regardless, Price did this privately, forcing it on no one.

So here’s to capitalism, a system that allows us to learn from the failure of others without having to pay for it.[/quote_box_center]

It’s not just capitalism that can work this way, but politics.

Just think of the many wonderful-sounding ideas politicians and social planners cook up for us all the time. Thank goodness most of them aren’t implemented.

The difference between them and CEO Price is that failure is system wide. That’s why it’s more important than ever, at the very least, to keep a system of decentralized federalism in place. Big ideas can make for big failures. Think Obamacare. Or imagine a $15 an hour (or a $70,000 a year) national minimum wage.

In Switzerland, for example, federal power is highly decentralized. Canton-level experiments in social planning can be avoided or adopted by the other cantons, but they can rarely if ever become national policy. And thanks in part to that tradition, Switzerland avoided joining the European Union superstate. And lucky for them — unlike Germany, they’re not currently on the hook for Greece’s experiments in credit card welfare statism.

The lessons? First, experimentation is good. The next great innovation will come out of experimenters like CEO Price. And he should be free to experiment with the rules of the firm he runs.

Second, experiments should start local. Great ideas often emerge from a lot of trial and error, and rules — especially new rules — should have to compete with other sets of ideas. Social and economic experiments are also best if they start locally.

Though it might be tempting to hurl I-told-you-sos at Dan Price, he is to be commended for his attempt to criticize by creating — using his own resources. That’s more than we can say for politicians who want to experiment with other people’s lives.





Reprinted from FEE with permission under Creative Commons Attribution License


Jeb Bush: ‘People Need To Work Longer Hours’ To Grow The Economy

In an interview with New Hampshire’s Union Leader on Wednesday, Bush was asked if he had any plans for tax reform, such as a flat tax, and he replied:

[quote_center]“My aspiration for the country and I believe we can achieve it, is four percent growth as far as the eye can see. Which means we have to be a lot more productive, workforce participation has to rise from its all-time modern lows. It means that people need to work longer hours and, through their productivity, gain more income for their families. That’s the only way we’re going to get out of this rut that we’re in.”[/quote_center]

When asking Bush about his plans for tax reform, the Union Leader inquired about a possible flat tax, which has already been proposed by Bush’s rival, GOP presidential candidate Sen. Rand Paul (R-Ky.), who announced his plan to make more than $2 trillion in tax cuts by replacing the IRS tax code with a flat tax of 14.5 percent on individuals and businesses in June.

ABC News reported that the Democratic National Committee was quick to release a statement, calling Bush’s comment “easily one of the most out-of-touch comments we’ve heard so far this cycle,” and saying that Bush would not support the middle class as president.

Bush responded by releasing a statement claiming that his comment was not about full-time workers, and was instead directed towards the under underemployed and part-time workers.

“Under President Obama, we have the lowest workforce participation rate since 1977, and too many Americans are falling behind,” Bush said. “Only Washington Democrats could be out-of-touch enough to criticize giving more Americans the ability to work, earn a paycheck, and make ends meet.”

The Washington Post reported that Bush told reporters that he blames the Obama administration and congressional Democrats for “enacting a series of policies that have made it harder for businesses to create jobs and for Americans to work longer hours.”

“If we’re going to grow the economy people need to stop being part-time workers, they need to be having access to greater opportunities to work,” Bush said. “You can take it out of context all you want, but high-sustained growth means that people work 40 hours rather than 30 hours and that by our success, they have money, disposable income for their families to decide how they want to spend it rather than getting in line and being dependent on government.”

For more news related to the 2016 Presidential election, click here.

For The United States, Puerto Rico Debt Is A Bigger Tragedy Than Greece

Global stock markets got beaten up overnight and the carnage continues here in the U.S.

By the time they rang the closing bell, the Dow Jones was down 350 points. That’s just under two percent. That was the biggest point loss of the year. The Nasdaq was down 122 points. On a percentage basis, I think that was closer to two-and-a-half percent.

The real interesting story, though, happened in the foreign exchange markets. The news that sparked the sell off was the Gr-exit—the potential now being maybe 50-50, maybe more, that Greece is going to exit, that the Greek citizens are not going to accept the terms necessary to qualify for the bailout.

About a week ago, there was all sorts of optimism that a deal was done. That fell apart over the weekend. They announced the closure of Greek banks. I believe they will remain closed. There were photographs on the Internet of long lines at ATM machines across Greece.

Hey, by the way, take a good look at those images, because that’s coming to an ATM machine near you one day—except it won’t be as civil. I expect to see a lot more unrest, maybe a lot more fighting breaking out on those long lines—not the civility that we saw over there in Greece.

All of that initially sent the dollar rising. The euro got down last night, when I looked at it near the lows, the euro was down near 1.09 to the dollar, so an initial sell off of two cents because people were worried. Oh, Greece is going to leave the eurozone; this is bad for the euro.

I’ve been saying all along that I think the best thing that could happen to the euro is a Gr-exit because I think Greece is dragging everybody else down. Not that there’s no more dirty shirts in that hamper, but the whole idea, or the fear, is that when Greece goes it’s going to be some sort of domino effect—that Portugal and Spain are going to go. I think it might have the opposite effect. I think it will scare the rest of Europe straight. They’re not going to want to live through what the Greeks are going to have to endure, and so they might want to get their economic house in order.

But also, you’ve got the old trading adage of buy the rumor, sell the fact. People have been buying dollars and selling euros for so long now based on worries that a Gr-exit, that when it finally happens you take profits—you go the other way. And that’s what happened.

Now Puerto Rico has announced it cannot pay its debt. What does Puerto Rico debt mean for the United States? Tune in to the full podcast episode above and listen to more episodes of Peter Schiff Radio here at Truth In Media.

Peter Schiff: The Illusion of the Strong Jobs Report

Let’s get into the illusion of the strong jobs report.

Generally weaker than expected data was punctuated by yet another better-than-expected nonfarm payroll report. This comes despite the fact that earlier in the week the ADP private sector payroll report came in slightly below estimates at 201,000 jobs added in May. Also, 5,000 manufacturing jobs lost—the third consecutive monthly decline in manufacturing jobs. These are the important jobs. Not only are they higher paying, but they’re productive. And they also lead to exports, which improve our balance of payments.

But the official number, which came out Friday morning, the consensus estimate, was 220,000 jobs. And that followed the 223,000 jobs that was originally reported for April.

Well, the actual number, according to the government—280,000.

280,000 jobs created in May, far exceeding the 220,000 jobs that had been forecast. So it’s beat by 60,000 jobs. They had a slight downward revision to April—221,000—and they upwardly revised March somewhat. So overall, more jobs than had been anticipated.

Now, the unemployment rate did increase to 5.5 percent as a few hundred thousand more people reentered the labor force—which is bucking the trend. The labor force had been declining. Now some people have come back to the labor force. In fact, the labor force participation rate is back up to 62.9 percent from 62.8 percent. Remember, the lowest it’s been is 62.7 percent. So at 62.9 percent, we’re not far from the low. And certainly there is no indication that the trend has changed.

Of course, a lot of these people who have reentered the labor force don’t even want to be there.

Remember, when we’re talking about labor force participation, when you look at older people—workers in their 60s and 70s—participation is at record highs. It’s younger Americans—Americans in their teens, 20s and 30s—that’s where the participation is at all-time record lows. And a lot of the older guys—who are now in the workforce, who were not in the workforce before—don’t even want to be there. They’d rather be retired. But unfortunately they can’t afford that luxury anymore, so they need jobs.

And of course a lot of them don’t even want full-time jobs. They want part-time jobs. So a lot of these 200,000 jobs that were created are in fact part-time jobs. And they represent workers who would assume not even work in the first place. But, of course, a lot of these older Americans, they don’t want full-time jobs, so it works perfectly for them.

They don’t want full-time jobs for a couple of reasons. One, they want to be at least semi-retired. They don’t want to work 40-hour weeks. They’re just trying to work enough to make ends meet. They need to pay their bills. So if they can do that with a part-time job, that’s what they want to do.

But also, remember, if you’re over 65, you’re getting Social Security. But as you get a job, of course you still pay Social Security taxes, right—even though you’re collecting Social Security. But at some point, as you earn a certain amount of money, you start losing your Social Security benefits, which acts as an added marginal tax. So people on Social Security may want to work a little bit to make just enough money to make ends meet, but they don’t want to earn too much money where they end up paying a very high marginal tax (because they start losing some of their Social Security benefits).

That’s also too part of the illusion of the strong jobs report. I get into the data that came out in the podcast episode above. Tune in now and catch more of the Peter Schiff Show here at Truth In Media.

Peter Schiff Says Don’t Believe the Hype: “The dollar is going to crash, buy gold”

The dollar index is on a nine-straight month rise. This change caught investors by surprise and has caused a shift in perspective where the dollar is consistently in a state of debt-fueled decline. While some minds are changing, Peter Schiff, CEO of EuroPacific Capital, said that people shouldn’t believe the hype and called that storyline a “false narrative.”

“I’m surprised it’s rallied this much but that doesn’t mean it’s permanent. When traders wake up to reality and realize how wrong these [bullish dollar] bets are, they’re going to unwind these trades, and the dollar is going to implode very quickly,” he said. “I think the people who have been betting on the dollar and have made a lot of paper profits, if they’re caught in this when it reverses, they’re going to end up losing a lot of money,” he explained.

Schiff compared the dollar to the subprime mortgage crisis when the banks making those bets would have failed if the government didn’t bail them out. “The question is how many banks are going to fail when the dollar collapses,” he asked. “I wonder how many of our lending institutions are levered up short along the dollar. I wonder what happens when they get caught in that trade.”

“When people realize we can never raise rates and it’s permanent QE, that the Fed can’t shrink its balance sheet and has no ability to control inflation – there’ll be no place to hide,” he said. “The real move of the dollar is going to be a crash.” Schiff has a bleak outlook for the dollar, but he said his long-standing advice to buy gold will pay off for investors. “Traders are bearish on gold, because they’re bullish on the dollar,” he added. If you were surprised by how much gold increased after quarters 1 and 2, he said, that quarters 3 and 4 will be even better. Schiff said that he’s not sure how high gold will go.

“There’s no real ceiling on gold because there’s no floor on the dollar,” he added.

Wisconsin Becomes 25th Right To Work State

Republican governor and presidential hopeful Scott Walker signed Wisconsin’s right-to-work legislation on Monday, making Wisconsin the 25th state to pass this sort of legislation.

Employees in right-to-work states are not forced to pay union dues.

“This legislation puts power back in the hands of Wisconsin workers, by allowing the freedom to choose whether they want to join a union and pay union dues,” Walker said in a press release.  “This also gives Wisconsin one more tool to encourage job creators, like those here at Badger Meter, to continue investing and expanding in our state.  Freedom to Work, along with our investments in worker training, and our work to lower the tax burden, will lead to more freedom and prosperity for all of Wisconsin.”

Wisconsin joins neighbors Iowa and Michigan, which both passed similar legislation in 2012.

Even some union members aren’t opposed to this rule change, according to The Daily Signal:

“This is something I’ve never understood, that people think right to work hurts unions,” Gary Casteel of the United Auto Workers said last year. “To me, it helps them. You don’t have to belong if you don’t want to. So if I go to an organizing drive, I can tell these workers, ‘If you don’t like this arrangement, you don’t have to belong’ versus ‘If we get 50 percent of you, then all of you have to belong, whether you like to or not.’ I don’t even like the way that sounds, because it’s a voluntary system, and if you don’t think the system’s earning its keep, then you don’t have to pay.”

Poll: Concerns Over Government Leadership Surpass Economy For First Time

A recent Gallup Poll revealed that the largest concern among Americans in 2014 was poor government leadership, which topped concern over the economy for the first time in Gallup’s polling history.

The poll, which was published on Friday, found that in 2014, there were four main issues that generated the greatest amount of public concern: government leadership, the economy, unemployment, and healthcare.

According to Gallup, this poll was conducted as a part of the monthly Gallup Poll Social Series, which surveys a random sample of “approximately 1,000 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.”

18% of the Americans surveyed felt that government leadership, related to both President Obama and the Republicans in Congress, was the most important problem in the United States. Complaints about the economy were voiced by 17%, followed by unemployment by 15%, and healthcare by 10%.

Following the top four complaints, 8% of Americans chose immigration, 6% named the federal budget deficit, and 5% listed ethical or moral decline as the largest issues in the country. According to Gallup, this was the “first time since 2001 that no single issue averaged 20% or more for the year.”

Gallup noted that there was uneven attention given to the issues throughout the year, with mentions of unemployment “consistently higher in the first half of 2014 than later in the year,” and mentions of race relations sparking from the average 2% to 13% in December.

Gallup found that, not only was 2014 the “first year since 2007 that the economy was not the top ranking issue,” it was also the “first year ever in Gallup records that dissatisfaction with government topped the list.”

Of the top five issues that most concerned Americans in 2014, the economy and unemployment are significantly less dominant than they were even two years ago,” noted Gallup. “At the same time, concerns about government and immigration have been mounting, while concerns about healthcare have consistently simmered at a moderately high level since 2009.”

Gallup stated that the lack of Americans’ ability to “converge on a single pressing concern” in 2014, the way they had in the past, could have implications on the 2016 presidential elections, and “could make candidates’ task of honing a message for the election more complex.

Expert: U.S. Has Leveraged Economy On Shale Oil, Which Saudis May Be About To Crash

Washington D.C.- There is a lot being said about falling gas prices. For the most part, everyday Americans and consumers across the board are excited to finally see relief at the gas pumps.

Without question, the biggest reason for this steep decline in prices comes back to the Saudis who are flooding the international market with crude oil. How successful have the Saudis been in changing the price of barrel of oil? Very. Oil prices, which dropped from $106 a barrel in June, to $55.73 a barrel in December, have experienced a 47 percent price decline in less than six months.

There is various speculation about why the Saudis are doing this but most experts believe it is an attempt to shut down the emerging natural gas market that is booming right now in a number of countries, including the United States.

By reducing the price of a barrel of oil to below $40, the Saudis will be able to cause the natural gas and shale oil industry to grind to a halt. But the ramifications of that are much bigger than just within the oil industry. Casey Research’s Marin Katusa talked with Ben Swann about this issue and says that the big untold story here, the U.S. financial markets, mutual funds, Wall Street and 40% of the entire U.S. economy has been leveraged on shale oil. If the Saudi’s actually stop the shale industry, a financial collapse larger than the one in 2008 would take place.

Watch the interview above as Katusa, the New York Times best selling author of “The Colder War, How the Global Energy Trade Slipped From America’s Grasp” explains how the house cards may come crashing down.

Ben Swann Interviews Peter Schiff On China Overtaking U.S. As World’s Largest Economy

The Chinese economy just pushed past the US to become the world’s largest economy (at least according to purchasing power parity). Although long expected by many experts, the Asian powerhouse’s snatching of the top spot has taken some by surprise.

Euro Pacific Capital President Peter Schiff speaks with Ben Swann on why the US is now number two.

VIDEO: Clinton delivers her version of Obama’s, “You didn’t create that.”

BOSTON, October 27, 2014- Last Friday, at a campaign event for Massachusetts’ Democratic gubernatorial candidate Martha Coakley in Boston, Hillary Clinton slipped up and revealed what many have always known to be her true views towards capitalism and free markets.

During her stump speech Clinton stated, “Don’t let anybody tell you that it’s corporations and businesses that create jobs. You know that old theory, trickledown economics. That has been tried, that has failed. It has failed rather spectacularly. One of the things my husband says when people say, ‘What did you bring to Washington?’ He says, ‘I brought arithmetic.’ ”

Trickle down economics, also known as supply-side economics, is the theory at the heart of capitalism and free markets. The economic principle encompasses the theory that cutting taxes and lessening the amount of business regulations will in turn free up capital and enable businesses to grow, businesses which will in turn hire more employees and stimulate the economy.

Clinton joins the ranks of several other democrats who have slipped up in speeches and revealed their true feelings towards capitalism. In a 2012 campaign speech, President Barack Obama famously stated, “You didn’t build that” in relation to small business owners in America.

This is also not the first gaffe Clinton has made herself. In June of this year while promoting her latest book Clinton famously made the claim that she and her husband, former President Bill Clinton, were “dead broke” when they left the White House. The claim was rated as “mostly false” by PolitiFact.com.

The former Secretary of State is expected to be a contender in the 2016 Presidential race though she has yet to announce her candidacy. Clinton is largely expected to receive the Democratic nomination for the presidency in 2016 if she announces her campaign.

You can watch the full clip of Clinton’s remarks here.


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eBay blasts underhanded government attempts on internet sales tax in email to millions

WASHINGTON, D.C., October 23, 2014 – On Thursday evening eBay, the multinational e-commerce mega company, sent out an email to  millions of its American clients blasting the U.S. Congress for attempting to implement an internet sales tax.

The email stated, “Over 18 months ago the U.S. Senate voted on a deeply unpopular Internet sales tax bill. Unfortunately, rather than find consensus, there are now plans to bypass the normal legislative process and attach the Internet sales tax bill to whatever legislative vehicle is most likely to pass in the short, post-election, ‘lame-duck’ session of Congress.”

eBay’s Vice President & Deputy General Counsel of Government Relations Tod Cohen sent the email and in it urged citizens to take action to prevent Congress from passing a bill that would introduce an internet sales tax.

Cohen stated, “Now is the time to let your senators know if you oppose an Internet sales tax bill that will harm online small businesses.”

You can read the full email here.


Dear Michael:

Over 18 months ago the U.S. Senate voted on a deeply unpopular Internet sales tax bill. Unfortunately, rather than find consensus, there are now plans to bypass the normal legislative process and attach the Internet sales tax bill to whatever legislative vehicle is most likely to pass in the short, post-election, “lame-duck” session of Congress.

Now is the time to let your senators know if you oppose an Internet sales tax bill that will harm online small businesses. Click here to ask your senators to keep Internet sales taxes out of the post-election “lame-duck” session of Congress.

Together, we can make a difference!


Tod Cohen
Vice President & Deputy General Counsel, Government Relations
eBay Inc.


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Microsoft CEO apologizes again for saying women shouldn’t ask for raises

BELLEVUE, WASHINGTON, October 17, 2014 – Microsoft CEO Satya Nadella issued another apology following his remarks at a conference for women where he suggested that women should not ask for raises. Nadella’s second apology was sent in the form of an internal company memo to all employees which Todd Bishop at GeekWire received.

In his apology, Nadella stated, “One of the answers I gave at the conference was generic advice that was just plain wrong. I apologize. For context, I had received this advice from my mentors and followed it in my own career.”

“I do believe that at Microsoft in general good work is rewarded, and I have seen it many times here. But my advice underestimated exclusion and bias — conscious and unconscious — that can hold people back. Any advice that advocates passivity in the face of bias is wrong. Leaders need to act and shape the culture to root out biases and create an environment where everyone can effectively advocate for themselves,” Nadella continued.

Nadella’s original comments at the Grace Hopper conference in Arizona last week were in response to a female conference attender’s question regarding how women should go about requesting a raise in the work firm. The conference was specifically geared to women in the tech field.

Nadella initially responded to the question posed at the conference by stating, “It’s not really about asking for the raise, but knowing and having faith that the system will actually give you the right raises as you go along.” He continued, “Not asking for a raise is good karma.”

You can read Nadella’s full apology in his company memo here.

In today’s monthly Q&A session, I want to give some perspective about the past few weeks — my trip to Asia, Gartner Symposium, the Adobe MAX conference, the Grace Hopper conference and Windows 10, as well as focus on Diversity and Inclusion (D&I) (and, of course, anything else on your minds). In November we’ll have a tightly focused conversation with Terry about Windows 10 more broadly.

Before our discussion, I want to provide additional thoughts from the Grace Hopper conference last week. Thank you to the many people who sent me comments and feedback over the past few days. It was a humbling and learning experience.

One of the answers I gave at the conference was generic advice that was just plain wrong. I apologize. For context, I had received this advice from my mentors and followed it in my own career. I do believe that at Microsoft in general good work is rewarded, and I have seen it many times here. But my advice underestimated exclusion and bias — conscious and unconscious — that can hold people back. Any advice that advocates passivity in the face of bias is wrong. Leaders need to act and shape the culture to root out biases and create an environment where everyone can effectively advocate for themselves.

Make no mistake: I am 100 percent committed to Diversity and Inclusion at the core of our culture and company. Microsoft has to be a great place to work for everybody. I deeply desire a vibrant culture of inclusion. I envision a company composed of more diverse talent. I envision more diverse executive staff and a more diverse Senior Leadership Team. Most of all, I envision a company that builds products that an expansive set of diverse and global customers love. As we make Diversity and Inclusion central to Microsoft’s business, we have the opportunity to spark change across the industry as well. This is the accountability the Senior Leadership Team and I own.

There are three areas in which we can and will make progress — starting immediately.

First, we need to continue to focus on equal pay for equal work and equal opportunity for equal work. Many employees have asked if they are paid on par with others at the company. Here’s what HR confirmed for me: Although it fluctuates by a bit each year, the overall differences in base pay among genders and races (when we consider level and job title) is consistently within 0.5% at Microsoft. For example, last year women in the US at the same title and level earned 99.7% of what men earned at the same title and level. In any given year, any particular group may be slightly above or slightly below 100 percent. But this obscures an important point: We must ensure not only that everyone receives equal pay for equal work, but that they have the opportunity to do equal work.

Second, we need to recruit more diverse talent to Microsoft at all levels of the company. As you saw in the numbers we recently released, we have work to do at Microsoft and across the industry. These numbers are not good enough, especially in a world in which our customers are diverse and global. To achieve this goal — and especially in engineering — we will have to expand the diversity of our workforce at the senior ranks and re-double our efforts in college and other hiring. Each member of the SLT will be goaled to increase Diversity and Inclusion.

Third, we need to expand training for all employees on how to foster an inclusive culture. Although we already offer training and development in these areas, we need to ensure the right level of accountability for modeling inclusive behaviors in all our work and actions. We all need to think about how Connects are written, performance feedback is delivered, new hires are selected, how promotion and pay decisions are made, etc. We need to focus on both the conscious and unconscious thinking that affects all these things, and mandatory training on D&I is a great place to start.

I am personally fully committed to these efforts and so is the rest of the Senior Leadership Team. We are going to work side by side with Gwen Houston, GM, Diversity and Inclusion, each month to drive progress on the three actions above, and Gwen and her team will continue to gather input, refine our existing plans and develop new approaches. I’ll report back to you in future all employee Q&A sessions starting in November.

When I took on my role as CEO I got advice to be bold and be right. Going to the Grace Hopper conference to further the discussion on women in technology was bold, yet my answer to a key question was not right. I learned, and we will together use this learning to galvanize the company for positive change. And I’ll certainly go back to Grace Hopper next year to continue the dialogue. We will make Microsoft an even better place to work and do great things.


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Peter Thiel: We Are On “A Government Bubble Of Massive Size”

Entrepreneur Peter Thiel appeared on CNBC’s “Squawk on The Street” and pointed out distortion of the bond market while warning of a looming government bubble.

“You said that things would get quite tough when QE ended a month ago, and sure enough the volatility is spiking,” said host Simon Hobbs.

“We’ve been in this world where people have been printing money at the Fed for six years, and so it is a very strange question, what happens when it ends,” replied Thiel.

“What do you think of tech valuations at the moment?” asked Hobbs.

“There’s a way in which the QE has affected all valuations. I think it affects- I think the thing that is most distorted is the bond market and fixed income, and perhaps less on the equity side, but we certainly are back on a government bubble of massive size,” said Thiel.

ISIS intervention price-tag shocking many American taxpayers

WASHINGTON, D.C., September 30, 2014 –  Last week, Defense Secretary Chuck Hagel presented reporters with a price-tag that is shocking many war-weary Americans. According to Hagel, roughly $7 million to $10 million per day has been spent on U.S. operations against the Islamic State (ISIS) since June 16, when American troops were first deployed to assess the Iraqi military and advise its commanders.

That number brings U.S. military efforts against the Islamic State to nearly a billion dollars thus far, with an expected $2.4 billion to $3.8 billion price tag for the year if air and ground operations continue as planned. These expected budget cost analysis were released Monday by the non-partisan think tank, Center for Strategic and Budgetary Assessments.

The analysis also noted an even higher price tag for the fight against ISIS could be expected if an increase in air-strikes and ground troops occurs, with annual costs possibly reaching $13 billion or even $22 billion.

The report by the Center stated, “Future costs depend, to a great extent, on how long operations continue, the steady-state level of air operations, and whether additional ground forces are deployed beyond what is already planned”.

Since August 8, when the U.S. first launched its air strikes against the Islamic State, 290 air strikes have been carried out in Iraq and Syria, with the U.S conducting 265 of that number. Over 1600 U.S. troops are being deployed in Iraq and U.S. planes are flying an average of 60 attacks a day.

Taking these statistics into account, the analysis figured that the U.S. military’s efforts against the Islamic State would currently costs between $200 million and $320 million a month.

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New labor statistics show many Americans still suffering in the job market

WASHINGTON D.C., – September 29, 2014 – New data complied by the Senate Budget Committee shows that nearly one in four of the 124.5 million Americans ages 25-54 are not working. Senator Jeff Sessions (R-Alabama) created the chart based on data from the Bureau of Labor Statistics.

Sessions’ office released a statement further explaining the chart stating, “There are 124.5 million Americans in their prime working years (ages 25–54). Nearly one-quarter of this group -28.9 million people, or 23.2 percent of the total- is not currently employed. They either became so discouraged that they left the labor force entirely, or they are in the labor force but unemployed. This group of non-employed individuals is more than 3.5 million larger than before the recession began in 2007.”

Those attempting to minimize the startling figures about America’s vanishing workforce—workplace participation overall is near a four-decade low—will say an aging population is to blame. But in fact, while the workforce overall has shrunk nearly 10 million since 2009, the cohort of workers in the labor force ages 55 to 64 has actually increased over that same period, with many delaying retirement due to poor economic conditions,” the statement continued. “In fact, over two-thirds of all labor force dropouts since that time have been under the age of 55. These statistics illustrate that the problems in the American economy are deep, profound, and pervasive, afflicting the sector of the labor force that should be among the most productive.”


Nearly 1 in 4 Americans ages 25-54 are not working
Nearly 1 in 4 Americans ages 25-54 are not working

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