17 Facts To Show Anyone That Believes That The U.S. Economy Is Just Fine

No, the economy is most definitely not "recovering".  Despite what you may hear from the politicians and from the mainstream media (shrugging off today's terrible GDP print), the truth is that the U.S. economy is in far worse shape than it was prior to the last recession.  In fact, we are still pretty much where we were at when the last recession finally ended.  When the financial crisis of 2008 struck, it took us down to a much lower level economically.  Thankfully, things have at least stabilized at this much lower level.  For example, the percentage of working age Americans that are employed has stayed remarkably flat for the past four years.  We should be grateful that things have not continued to get even worse.  It is almost as if someone has hit the "pause button" on the U.S. economy.  But things are definitely not getting better, and there are a whole host of signs that this bubble of false stability will soon come to an end and that our economic decline will accelerate once again.  The following are 17 facts to show to anyone that believes that the U.S. economy is just fine...

#1 The homeownership rate in the United States has dropped to the lowest level in 19 years.

#2 Consumer spending for durable goods has dropped by 3.23 percent since November.  This is a clear sign that an economic slowdown is ahead.

#3 Major retailers are closing stores at the fastest pace that we have seen since the collapse of Lehman Brothers.

#4 According to the Bureau of Labor Statistics, 20 percent of all families in the United States do not have a single member that is employed.  That means that one out of every five families in the entire country is completely unemployed.

#5 There are 1.3 million fewer jobs in the U.S. economy than when the last recession began in December 2007.  Meanwhile, our population has continued to grow steadily since that time.

#6 According to a new report from the National Employment Law Project, the quality of the jobs that have been "created" since the end of the last recession does not match the quality of the jobs lost during the last recession...

• Lower-wage industries constituted 22 percent of recession losses, but 44 percent of recovery growth.
• Mid-wage industries constituted 37 percent of recession losses, but only 26 percent of recovery growth.
• Higher-wage industries constituted 41 percent of recession losses, and 30 percent of recovery growth.

#7 After adjusting for inflation, men who work full-time in America today make less money than men who worked full-time in America 40 years ago.

#8 It is hard to believe, but 62 percent of all Americans make $20 or less an hour at this point.

#9 Nine of the top ten occupations in the U.S. pay an average wage of less than $35,000 a year.

#10 The middle class in Canada now makes more money than the middle class in the United States does.

#11 According to one recent study, 40 percent of all Americans could not come up with $2000 right now even if there was a major emergency.

#12 Less than one out of every four Americans has enough money put away to cover six months of expenses if there was a job loss or major emergency.

#13 An astounding 56 percent of all Americans have subprime credit in 2014.

#14 As I wrote about the other day, there are now 49 million Americans that are dealing with food insecurity.

#15 Ten years ago, the number of women in the U.S. that had jobs outnumbered the number of women in the U.S. on food stamps by more than a 2 to 1 margin.  But now the number of women in the U.S. on food stamps actually exceeds the number of women that have jobs.

#16 69 percent of the federal budget is spent either on entitlements or on welfare programs.

#17 The number of Americans receiving benefits from the federal government each month exceeds the number of full-time workers in the private sector by more than 60 million.

Taken individually, those numbers are quite remarkable.

Taken collectively, they are absolutely breathtaking.

Yes, things have been improving for the wealthy for the last several years.  The stock market has soared to new record highs and real estate prices in the Hamptons have skyrocketed to unprecedented heights.

But that is not the real economy.  In the real economy, the middle class is being squeezed out of existence.  The quality of our jobs is declining and prices just keep rising.  This reality was reflected quite well in a comment that one of my readers left on one of my recent articles...

It is getting worse each passing month. The food bank I help out, has barely squeaked by the last 3 months. Donors are having to pull back, to take care of their own families. Wages down, prices up, simple math tells you we can not hold out much longer. Things are going up so fast, you have to adopt a new way of thinking. Example I just had to put new tires on my truck. Normally I would have tried to get by to next winter. But with the way prices are moving, I decide to get them while I could still afford them. It is the same way with food. I see nothing that will stop the upward trend for quite a while. So if you have a little money, and the space, buy it while you can afford it. And never forget, there will be some people worse off than you. Help them if you can.

And the false stock bubble that the wealthy are enjoying right now will not last that much longer.  It is an artificial bubble that has been pumped up by unprecedented money printing by the Federal Reserve, and like all bubbles that the Fed creates, it will eventually burst.

None of the long-term trends that are systematically destroying our economy have been addressed, and none of our major economic problems have been fixed.  In fact, as I showed in this recent article, we are actually in far worse shape than we were just prior to the last major financial crisis.

Let us hope that this current bubble of false stability lasts for as long as possible.

That is what I am hoping for.

But let us not be deceived into thinking that it is permanent.

It will soon burst, and then the real pain will begin.

Article by Michael Snyder of The Economic Collapse blog.

Russia Makes Friends: To Hold Military Drill With China; Strikes Multi-Billion Deals Bahrain And Iran. Eyeing Pipeline, Russia Forgives North Korean Debt

 The G-8 may be no more as the G-7 throws every possible case of harsh language known to man at the Kremlin, which obstinately refuses to back down, while re-escalating sanctions against a Russia which merely has done what the US does every single time its national interest abroad is threatened, but one thing is becoming ever clearer: while the west isolates Russia with ever stricter measures, Russia has decided to make some new friends.

Such as China:

China and Russia will hold a "maritime cooperation-2014" drill in East China Sea at end-May, Voice of Russia reports on its Chinese-language website yesterday.

China and Russia will conduct reconnaissance in the area within 3 days to prepare for the drill, the report says, citing an unidentified representative from Russian navy.

Earlier, the Russian military delegation of the Russian Navy, led by Viktor Karamazov Couchepi, arrived in Shanghai. Naval officials and representatives of the General Command of the Pacific Fleet met the Russian military delegation.

Such as Iran:

Iran and Russia are negotiating a power deal worth up to $10 billion in the face of increasing US financial alienation. The construction of new thermal and hydroelectric plants and a transmission network are in the works. Iran’s Energy Minister Hamid Chitchian met his Russian counterpart Aleksandr Novak in Tehran on Sunday in order to discuss the potential power deals, according to Iran’s Mehr news agency.

“[Expansion of] Iran-Russia relations are not only to the benefit of the two nations, but also are beneficial to entire region,” Iranian President, Hassan Rouhani, stated in a meeting with Novak in Tehran on Sunday, reported Iran’s FARS news agency.

Plans include the construction of hydroelectric and thermal generating plants and a new transmission network. The possibility of Russia exporting 500 megawatts of electricity to Iran is also on the cards, said Mehr.

The strengthening of economic ties between the two countries is of heightened significance given both economic sanctions on Iran, imposed with the aim of encouraging Iran to cut its uranium stockpiles, and new economic sanctions on Russian officials imposed on Monday.

On Sunday, Chitchian reportedly stressed “the need for further expansion of economic ties between Tehran and Moscow, particularly in the energy and commerce spheres,” stated Mehr.

Moscow has additionally been discussing the trade of 500,000 barrels a day of Iranian oil for Russian goods with Tehran. The protracted deal, first reported at the beginning of April could be worth as much as $20 billion, and has rattled Washington because it could bring Iran's crude exports above one million barrels a day - the threshold agreed upon in the nuclear deal between the P5+1 powers - US, Britain, France, China, Russia and Germany – and Iran.

such as Bahrain:

The governments of Bahrain and Russia have signed a deal to cooperate on investments, at a time when U.S. and European governments are imposing economic sanctions on Russia over the crisis in Ukraine.

Bahrain is a U.S. diplomatic ally in the Gulf, and its decision suggests Western sanctions may not deter other countries from continuing to expand business ties with Russia.

In a statement on Tuesday, the Russian Direct Investment Fund (RDIF) said it had signed a memorandum of understanding with Bahraini sovereign wealth fund Mumtalakat to identify and work together on investment opportunities in their countries. Mumtalakat chief executive Mahmood al-Kooheji will join the RDIF's international advisory board, helping to formulate its strategic direction, the statement added.

The Bahraini fund is one of the smaller sovereign funds in the Gulf, with $7.1 billion of assets as of last September. The RDIF is a $10 billion fund created by Russia's government to make equity investments, mainly in the Russian economy.

And Such as North Korea

Reuters reported that Russia’s Duma voted to write off roughly $10 billion worth of the debt that North Korea owes Moscow from the days of the Soviet Union. The vote ratified an agreement made in September 2012, after a meeting between then-President Dmitry Medvedev and then-North Korean leader Kim Jong-il in Siberia in the summer of 2011.

At the time the agreement was first announced, The Guardian reported, citing Russia’s Finance Minister Sergei Storchak, that Moscow would forgive “90% of the debt and reinvest $1bn as part of a debt-for-aid plan to develop energy, health care and educational projects in North Korea.” Russian experts hailed the agreement as a sign that North Korea’s leadership was looking to initiate market style reforms in the reclusive country.

The Reuters report from this weekend said the deal ratified by the Duma on Friday would leave North Korea with about $1.09 billion worth of debt to Russia. North Korea would pay off that amount in six-month installations over the next twenty years. It also summarized Storchak as saying that the money Pyongyang pays back would be reinvested into North Korea.

North Korea was a strong ally of the Soviet Union during the Cold War, and Russia has forgiven the debt incurred by other Soviet allies like Cuba. However, the decision to forgive Pyongyang’s Soviet-era debt is most likely geared toward trying to bolster Russia’s plans to build a gas pipeline from its Sakhalin Island fields to South Korea via the North. The pipeline, which would also be accompanied by a railway, would reportedly carry 10 billion cubic meters of gas to South Korea annually. The gas would come from Russia’s state-owned energy company, Gazprom.

Moscow has been pushing for the Korean gas pipeline and railway for years as part of its strategy to diversify its energy markets away from Europe and toward Asia. This general goal has gained new urgency in the wake of Russia’s clash with the West over the Ukraine and Crimea.

The plan got a boost from Seoul over the weekend when South Korea’s Unification Ministry announced on Sunday that it had approved a trip to Pyongyang by Choi Yeon-hye, the president and CEO of the Korea Railroad Corp. Choi will lead a South Korean delegation to the Organization for Co-Operation between Railways (OSJD) meeting in the North Korean capital scheduled for April 24-28. Chinese and Russian rail officials will also be at the meeting, according to South Korean media outlets.

 If nothing else, at least it shows just how seriously the rest of the world (away from those G-7 members who are as insolvent as the US of course) is taking US sanctions and threats of retaliation. Meanwhile, back in the US, rigged stocks hit intraday highs on what we would otherwise call BTFWWWIIID... if only there was a D.

All NATO Aircraft Deployments In Response To The Ukraine Crisis : The West Prepares

This does not exactly look like de-escalation to us...

Morgan Stanley: Gold price won't see $1,300 again

The gold price on Tuesday continued to hover below the $1,300 an ounce level, down more than $80 an ounce from 2014 highs reached mid-March.

US investment bank Morgan Stanley added to the negative sentiment, forecasting the gold price to average $1,250 this quarter, decline to an average $1,168 in the second half of 2014 and weaken further to $1,138 next year.

The commodity analysts at Morgan Stanley are quoted in Barron's blog that record demand from China "won't be enough to keep gold’s price above $1,200 per ounce in the coming year, much less help it rise".

The bank blames a slide in the value of the Chinese currency, the yuan, against the US dollar for weakening demand.

Signs of a drop-off in the world's top importer of gold are already visible:

Mainland China's net imports totaled 80.6 tonnes in March, a 27% drop compared to the 111.4 tonnes imported in February.

Compared to the same time last year the drop-off was even more stark – down 38% from the record 130 tonnes in March 2013.

Another indication that there are fewer buyers in China is the disappearance of premiums paid on the Shanghai Gold Exchange.

From premiums that topped out at $37 when gold was trading around $1,200 last year, during March traders on average offered gold at a small discount to the quoted London spot price.

Geopolitical tensions and worries about the US economy won't attract safe-haven buying like it did earlier in 2014

March was the first month since September 2012 that gold did not attract a premium.

Driven in part by a weakening yuan, discounts on gold widened to as much as $9 an ounce below when the price were headed towards $1,400 in March.

Apart from Asian demand issues, factors that have helped gold gain some 8% in value this year compared to a 28% fall in 2013 will also be fading in importance over the course of 2014.

Morgan Stanley argues geopolitical tensions and worries about the US and Chinese economy won't attract safe-haven buying of gold like it did early this year.

And tepid interest from futures traders and ETF investors will see the metal drift lower this year and next.

Global aluminium market to shift to deficit in 2014: HSBC

The Metals Quarterly Report for Q2 2014 released by HSBC forecasts the global aluminium market to turn into deficit from surplus during 2014. However, the firm believes that the market may remain balanced in 2015.

HSBC states that it has lowered its non-Chinese production forecasts for 2014 and 2015 to 640,000 mt and 940,000 mt respectively.

According to HSBC, the recent weak prices of aluminium have forced major facility shutdowns, which in turn may shift the market from surplus to deficit during this year. The global aluminium market may witness a global deficit of 144,000 mt in 2014. But the market may move back to 288,000 mt surplus by 2015.

The global surplus is likely to widen during 2016 and 2017,it added. This is mainly on the back of expectations that delayed projects in India and Russia may become online during 2016-’17. The bank anticipates new production to the tune of 4 million mt coming out of new smelters in these countries as well as in Russia, Canada and the Middle East.

The bank has also lowered its demand growth estimates for the five-year period from 2013-2017 down to 5.5% from 5.7%. The average aluminium price for 2014 may remain at $1,887 per mt. The prices may move above $2,000 per mt by the end of the year 2014.

Bengal hikes stamp duty on commodity contracts

The West Bengal Government has increased stamp duty on contract notes, a move that is likely to result in a fall in trading volumes at commodities exchanges.

According to recent notification , the State Government has imposed a stamp duty of 50 paise for every ₹5,000 in commodities traded.

Earlier, the stamp duty was 50 paise per contract, irrespective of the value of the contract.

The increase in stamp duty is likely to impact several commodity traders who are a part of these exchanges.

Low margin biz

Commodity traders generally operate on typically low margins, and depend mostly on high volumes to make money on trades.

A senior official at a commodity exchange, who did not wish to be identified, pointed out that an increase in stamp duty will logically lead to a decline in trade volumes as business will become unviable.

However, the trend is likely to be felt only over the coming months.

“Either these people will stop trading or they might move to some other state where the stamp duty is lower,” the official pointed out.

NSEL crisis

The increase in stamp duty is the latest in a series of incidents, including the introduction of the commodities transaction tax in 2013 and the payments crisis at the National Spot Exchange Ltd, that have resulted in a fall in trading volume at commodities exchanges .

Chinese Stimulus: Copper may benefit more than most metals

Morgan Stanley analysts said that they are surprised by copper’s under performance against the base metals complex so far this year, but suggest the red metal could benefit more than most metals if authorities in key consumer China move to stimulate the economy.

“Physical availability in the country is tightening, as inventories fall and SHFE (Shanghai Futures Exchange) structure enters its steepest backwardation since 2Q11,” said Morgan Stanley via Kitco News.

This trend is the result of power grid investment, which accounts for 47% of China’s copper demand, being up 13% year-on-year for the 2014 so far, pointing to the government’s goal of lifting investment 20% above the record spending in 2013.

“Scrap availability also remains tight, with March marking the 14th consecutive (year-on-year) decline in scrap imports. As copper’s under performance results from investor concerns over China, it could be the prime beneficiary if policymakers respond to worsening macro data, as we expect,” Morgan Stanley concluded.