A tide of money went out to emerging markets for more than a decade, pushed by accommodative monetary policy in the U.S. and pulled by the promise of robust growth.
Now that tide is coming back in as investors seek to repatriate funds or flock to U.S.-dollar denominated assets as a safe haven amid sluggish economic growth and global market turmoil.
America is the richest and most unequal nation in the world — at least when you look at the wealth in 55 of the more conventionally developed countries. Median income has largely fallen behind economic growth as corporations continue to retain a bigger share of the benefits, turning into a reverse of what is usually claimed as the danger of income redistribution.
But whether there are long term changes coming or not of their own accord is immaterial in this case. People in the U.S. don’t tend to think that way. What many perceive now is a basic economic unfairness. They work hard, play by the rules as they’ve learned them, and keep getting further behind. The debt funding for college and large purchases seems to be never ending for large portions of the populace, which cements in a sense of unending inequality.
I happen to be a proponent of a single payer universal health care program. [applause I see no reason why the United States of America, the wealthiest country in the history of the world, spending 14 percent of its Gross National Product on health care cannot provide basic health insurance to everybody. And that’s what Jim is talking about when he says everybody in, nobody out. A single payer health care plan, a universal health care plan. And that’s what I’d like to see. But as all of you know, we may not get there immediately. Because first we have to take back the White House, we have to take back the Senate, and we have to take back the House.”
This is a two trillion dollar part of our economy and it is my belief that it’s not just politically but economically it is better for us to start getting a system in place–a universal healthcare system signed into law by the end of my first term as president and build off that system to further to make it more rational….
By the way, Canada did not start immediately with a single payer system. They had a similar transition step.
It was Obama's decision to “pivot to deficit reduction” immediately after the stimulus passed and to appoint two deficit hawks, Alan Simpson and Erskine Bowles to head his deficit commission. And, it was his decision to both keep the major banks alive with low interest loans and to block efforts to use Dodd-Frank to break them up.
It’s tough out there, in the oil and gas sector. The company reported that revenues in the fourth quarter plunged 39% year-over-year, income from continuing operations plunged 58%, earnings per share plunged 57%. This includes North America, where revenue plunged 55% and operating income plunged 84%. If I use “plunge” a lot, it’s because it was that kind of earnings report.
After it was all said and done, the company had a net loss for the quarter of $1.01 billion.
To make those bitter results go down better, and to add that special little extra that Wall Street analysts like to hear, it offered a good swig of financial engineering: a new share repurchase program of $10 billion.
That’s on top of the repurchase program of $10 billion that was started in Q3 2013, and which “is about to be completed.” It was that buyback program that helped propel SLB from just over $90 a share in late 2013 to $120 in mid-2014, before it all came unglued. Shares have now lost nearly half their value since then, closing today at $61.45.....
And it offered another special little extra that Wall Street analysts fawn over: it’s going to ax and additional 10,000 people.
That’s on top of the 20,000 job cuts it had announced last year. This brings total layoff announcements to 30,000. For 2015, its “workforce reduction” expenses amounted to $920 million. Cutting expenses this way can get expensive....
But those share repurchases are coming under fire. They’re an outgrowth of QE. Easy credit didn’t lead to corporate investment and economic growth, but to share buybacks, according to Natixis, one of the largest asset managers in the world. Since they’ve caused companies to load up their balance sheet with debt, they’re now increasing financial instability. And they’re among the top reasons QE is a net-negative for the economy
There’s a reality, as well as a myth. Reality is that resources are limited. Prices tell us what we’ve got to work with. Falsify prices and you get errors of omission and commission. After a while, the system suffers from things it shouldna, oughtna done.
As Hjalmar Schacht, Germany’s minister of economics in the 1930s, put it: “I don’t want a low rate. I don’t want a high rate. I want a true rate.”
An honest interest rate tells the truth about how much savings are available and at what price. People still make mistakes; they still get up to some pretty weird stuff. But at least the perverts aren’t handing out candy on the playground.
In assessing the prospects for growth the first place to look is always consumption, which accounts for 70 percent of GDP. Consumption grew by slightly more than 3.0 percent over the last year. This was fueled in part by healthy job growth and in part by the plunge in energy prices that freed up more than $100 billion (0.6% of GDP) for spending in other areas.
It is difficult to see how this pace of consumption growth can be sustained in 2016. Job growth was likely to slow even without the Fed raising rates. This could be offset by more rapid growth in wages, but there is not much reason to expect much of a pickup here.
In sum, the cumulative picture makes it look like 2016 will be weaker than 2015. We may well see a growth rate under 2.0 percent and it is easy to envision scenarios, for example a collapse in office construction, in which growth will be closer to 1.0 percent.
This is not a question of guessing scores in a football game. Weaker GDP growth will translate into fewer jobs. That means both the suffering of the unemployed and less bargaining power for workers who have jobs, and therefore smaller wage gains. In short, the Fed should be much more concerned about the economy’s continuing weakness rather than the prospect its strength will lead to spiraling inflation. Last week’s rate hike should be the last one for a long time
Being confronted with reality the U.S. media is now changing its false narrative. The LA Times writes:
The Latakia attack mirrors similar government gains across the country, as forces loyal to President Bashar Assad, backed by Russian air power, have been on the offensive.
It's a dramatic shift for the forces of Assad, who less than six months ago had warned supporters that the government would have to "give up areas" after a string of humiliating setbacks.
The gains have strengthened the government's position in the run-up to Syrian peace negotiations scheduled to begin next week in Geneva.....
A source in the office of the Prime Minister Haidar al-Abadi said, “The United States delay of its support to Baghdad was not a coincidence or an unintentional lazy reaction. It was a strategic decision to: Teach Iraq a lesson for rejecting U.S military bases; To observe the Iranian military capability and inability of Tehran to use air power and intelligence gathering to defeat ISIS; To submit Baghdad to its will and dictate its conditions”.
That the U.S. used the ISIS phenomenon to again achieve regime change and U.S. control in Iraq was confirmed by Obama in an interview with Thomas Friedman:
The reason, the president added, “that we did not just start taking a bunch of airstrikes all across Iraq as soon as ISIL came in was because that would have taken the pressure off of [Prime Minister Nuri Kamal] al-Maliki. ...