Tag: america

The Incredible Shrinking Middle Class

Filed in BP, Debt, economy, Ford, Gold, GOld juniors, inflation, Lear, o, recession, silver by on February 16, 2011 0 Comments
The Incredible Shrinking Middle Class

Here’s a copy of the chart of the day.As you might have suspected, the rich get richer while everyone else basically gets to tread water. The article that follows once again drives home a point I have been harping on for years now: The Middle Class in a state of terminal decline. And when it vanishes for good, America will be a very different place. If you ask me, in a lot of ways it already is…. From CNNMONEY by Annalyn Censky entitled: How the middle class became the underclass “ Are you better off than your parents? Probably not if you’re in the middle class. Incomes for 90% of Americans have been stuck in neutral, and it’s not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed. In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data. Experts point to some of the usual suspects — like technology and globalization — to explain the widening gap between the haves and have-nots. One major pull on the working man was the decline of unions and other labor protections, said Bill Rodgers, a former chief economist for the Labor Department, now a professor at Rutgers University. International competition is another factor. While globalization has lifted millions out of poverty in developing nations, it hasn’t exactly been a win for middle class workers in the U.S. Factory workers have seen many of their jobs shipped to other countries where labor is cheaper, putting more downward pressure on American wages. “As we became more connected to China, that poses the question of whether our wages are being set in Beijing,” Rodgers said. Finding it harder to compete with cheaper manufacturing costs abroad, the U.S. has emerged as primarily a services-producing economy. That trend has created a cultural shift in the job skills American employers are looking for. As a result, the disparity between the wages for college educated workers versus high school grads has widened significantly since the 1980s. In 1980, workers …

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Inflation in (Mostly) the Wrong Places

It is often claimed that inflation is a benign, even positive, force. People assume that prices, wages, and assets will all rise together… In the real world, inflationary episodes don’t play out that way. Wages don’t keep up, and bubbles form in unexpected (and unwanted) places. In America, compensation is clearly stagnant. And the outlook for future pay raises is not good, as this chart from David Rosenberg shows: Contrast that with this next chart, which shows the percentage of companies planning to raise prices: Combine stagnant wages and slow growth with high unemployment and rising prices, and you get a recipe for stagflation. This scenario is being played out around the world. In the UK, consumer prices rose 4% in 2010. As noted by the Financial Times , wages aren’t keeping up: The prices of everyday goods and services are rising about twice as rapidly as average wages, Tuesday’s inflation figures confirmed — which means that the standard of living of many Britons is already falling. According to the Bank of England, average pay at the end of this year will be able to buy no more than it could in 2005. It is the first time that the purchasing power of earnings has fallen so far since the 1920s. I expect this trend to continue as long as the Fed’s mad experiment is ongoing. The thing about Central Bank “easing” is you never know where inflation will pop up… Easy money will always fuel speculators, who have little skin in the game, to find another bubble to “invest” in. Silver, gold, oil With printing presses switched “on” for the foreseeable future, we remain bullish on precious metals. Silver is holding above $30 today and could hit $37.50 on the next leg up. Coal, oil, and natural gas investments should continue to do well. And as my colleague Nick Hodge of Energy and Capital says, “Buy it if it burns.” If you’re not yet convinced that Fed printing is directly related to rising commodity prices, examine the following chart. (The solid blue line represents the Austrian Money Supply (AMS), and the solid teal line represents commodity prices ( IMF Commodity Index )): Note: The version of money supply shown

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Is Warren Buffett Heading for the Exits?

Is Warren Buffett Heading for the Exits?

Nobody ever rings a bell at the top. That’s why sometimes it is instructive to keep an eye on so-called “smart-money”—especially when they make a move towards the door. All of which, strikes me as curious since just a few months ago the grandfatherly Buffett said, “I am a huge bull on this country. We are not going to have a double-dip recession at all. I see our businesses coming back across the board.” Hmmmm…I wonder if he has changed his mind on this one. From Bloomberg by Andrew Frye entitled: Berkshire Exits BofA ‘a Loser’ on Three-Year Holding. “Warren Buffett’s Berkshire Hathaway Inc. sold its stake in Bank of America Corp., ending an investment that spanned three and a half years in which the lender’s stock lost more than two-thirds of its value Buffett’s firm had no shares in the Charlotte, North Carolina-based bank at the end of 2010, compared with 5 million shares three months earlier, Berkshire said late yesterday in a regulatory filing that lists the company’s U.S. stockholdings. Berkshire, where Buffett serves as chief executive officer and head of investments, entered the Bank of America stake with the purchase of 8.7 million shares in the second quarter of 2007. The lender’s CEO at the time, Kenneth Lewis, was expanding through acquisitions and telling investors that the U.S. housing slump would be over within months. “He’s closing out a loser,” said Jeff Matthews, author of “Pilgrimage to Warren Buffett’s Omaha,” whose Ram Partners LP invests in Berkshire and Bank of America. “We bought it during the crisis. But its earnings power coming out the crisis has been reduced.” Berkshire also eliminated its stakes in Nike Inc., Comcast Corp., Nalco Holding Co., Fiserv Inc., Lowe’s Cos. and Becton, Dickinson & Co. in the fourth quarter. In November, Berkshire disclosed that it had sold holdings of Home Depot Inc., trash hauler Republic Services Inc. and Iron Mounta”in Inc., a provider of records management. Buffett’s U.S. portfolio had 25 stocks and a value of about $52.6 billion at the end of December.” Maybe there is nothing to see here, but I don’t think so. You just can’t trust a guy that plays a ukulele. Related Articles: Warren Buffett’s Dividend Stock Strategy The Good Works of Bill Gates and Warren Buffett Ben Graham’s Winning Investment Advice Warren Buffett: The Investor of the Year To learn more about Wealth Daily click here. Advertisement Samurai Super Alloy It was the secret ingredient that turned an ordinary sword into the legendary Samurai Katana— the deadliest weapon before the arrival of modern rifles. Today, it’s crucial to the $987billion/

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Blinder Understates Cost of Carbon Tax

Filed in AMAG, BP, deflation, economy, job creation, lead, Lear, New Gold, o, Spot Gold by on February 4, 2011 0 Comments

In a recent article in the Wall Street Journal , Alan Blinder listed numerous alleged benefits of a phased-in carbon tax. Out of his entire column, he devoted a single sentence to the possible downside of his plan when he wrote, “No one likes to pay higher taxes.” A more balanced assessment shows that a carbon tax presents very real dangers, even if we rely on the same economic analysis that so enthralled Blinder. Spurring Innovation through Higher Taxes? Here’s Blinder explaining the economic benefits of a carbon tax that starts out low, but will eventually become quite steep: “Once America’s entrepreneurs and corporate executives see lucrative opportunities from carbon-saving devices and technologies, they will start investing right away — and in ways that make the most economic sense. I don’t know whether all this innovation will lead to 80% of our electricity being generated by clean energy sources in 2035, which is the president’s goal. But I can hardly wait to witness the outpouring of ideas it would unleash. The next Steve Jobs, Bill Gates and Mark Zuckerberg are waiting in the wings to make themselves rich by helping the environment.” We should also be clear that Blinder’s argument for job creation does not rely on the “negative externalities” of carbon emissions. Earlier in the piece, he made a list of the “few nice side effects” that would result from a carbon tax: “reducing our trade deficit, making our economy more efficient, ameliorating global warming …” Because he puts global warming at third in the list, we see that there is nothing peculiar to greenhouse gases behind his main argument for job creation. No, Blinder is making the simple observation that if the government imposes artificial costs on the…

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The WSJ’s Most Controversial Article… Ever

Filed in BP, CBS, democrats, economy, euro, Gold, GOld juniors, Gold Market, o, Warren Buffett, yuan by on February 2, 2011 0 Comments
The WSJ’s Most Controversial Article… Ever

On January 9th, The Wall Street Journal ran an article that would become the most viewed, commented-on editorial in the publication’s history. The article was so controversial that the author — a Yale Law School professor — received several death threats. Thousands of enraged American readers went so far as to accuse her of advocating physical and emotional violence against children… Meet Amy Chua: a petite, 48-year-old Chinese American and the author of the WSJ firestorm piece, “Why Chinese Mothers are Superior”. Obviously, the headline caught my attention. My wife is Chinese and we have three children. But what really surprised me was the viciousness of the comments from readers. But as I perused through the comments of anger, hate, and even threats to Chua, I realized I as was actually reading comments of insecurity, fear, and envy. Think about it… Had this article been written by anybody other than a Chinese professor, it would’ve gone largely unnoticed. Bottom line: Americans fear the Chinese juggernaut. Here are just a few headlines from the past year that have caused panic among Americans and the West: Pentagon Surprised, Concerned as China Debuts High-Tech Weapons — Politics Daily Chinese ‘Carrier-Killer’ Missile Could Reshape Sea Combat — Fox News Chinese ‘carrier-killer’ missile raises concerns of Pacific power shift — Associated Press China Stealth Fighter? Photos Released Online Raise Speculations — Huffington Post China’s First Stealth Fighter Test Successful — CBS News China backs Spain to emerge from crisis: Beijing — Sydney Morning Herald Move Over Europe, China Is Pushing to Bailout the Greek Economy — Washington Post Wow: China to Bail Out Europe? — Daily Mail UK China’s Pres. Hu calls dollar’s preeminence ‘thing of the past’ — Wall Street Journal President Hu provoking the US by suggesting yuan replace dollar as reserve currency — AsiaNews.it And now Americans are fearful of the Chinese mother, as reported by Time Magazine: “Tiger Mom: Amy Chua Parenting Memoir Raises American Fears.” I hear it every day… “China is going to overtake the U.S. economy… We need to catch up before they flood our markets with electric cars, wind turbines, and …

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The Great American Snooze Button

The Great American Snooze Button

I’ve been known to hit the snooze button on occasion. My long-suffering editor can attest to that. Just ten more minutes, then I’ll… Imagine if each press of the snooze button made the next BEEP-BEEP-BEEP happen a little bit sooner than the last. Eventually, you wouldn’t be able to sleep at all. Time to either wake up or smash the alarm clock. America has been hitting the fiscal snooze button for the last 30 years. The alarm is getting shriller these days, and it beeps more often than it used to. So, what’s the plan? In essence: smash that stupid alarm clock to bits and worry about consequences later. Social Security, and pensions, and Medicare, oh shit my! In 2011, Social Security will pay out $130 billion more in benefits than it collects in revenue. The program’s deficit this year would have been a paltry $45b, if not for Obama’s one-year deal lowering SS payroll deductions from 6.2% to 4.2%… The CBO admits the system will be completely drained by 2037. But even their own analysts don’t buy that, as reported by the Christian Science Monitor . By the way, did America really enact a tax break that lasts one year ? Yes, we did. The social security payroll tax cut is a 12-month deal— for now. Short-sightedness is at all-time highs in D.C. Now don’t get …

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Bank of America (NYSE:BAC) Boosts Las Vegas Sands (NYSE:LVS), Wynn Resorts (Nasdaq:WYNN)

Las Vegas Sands (NYSE:LVS) and Wynn Resorts (Nasdaq:WYNN) got a PT boost from Bank of America (NYSE:BAC), as the travel and luxury sector appears to be improving.Las Vegas Sands’ price target was raised from $50 to $55, while Wynn Resorts was increased from $120 to $140. Wynn Resorts was trading at $118.32, gaining $3.50, or 3.04 percent, as of 2:53 PM EST. Las Vegas Sands was trading at $46.18,

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The Only Biotech Stock to Own for 2011

Filed in BP, Gold, Gold Market, o, obama, target by on January 25, 2011 0 Comments
The Only Biotech Stock to Own for 2011

Take a look at the following chart: Last week, my favorite biotech stock— Anavex (AVXL-OTCBB) — made a two-and-a-half year high, reaching an intra-day high of $4.75. Readers who’ve followed my advice are sitting on at least a 50% gain… in most cases, even more. I’ve been urging (heck, I’ve been begging) readers to get a position in Anavex before it’s too late. Well my friend, that train is starting to leave the station, as Anavex has been on the receiving end of two excellent developments since the start of the year. ~~SIGNUP_WD~~ The first came as Obama signed into law the National Alzheimer’s Project Act (NAPA) . NAPA creates, for the first time, a coordinated national strategy to confront one of America’s most feared and costly diseases— a disease that will only plague more baby boomers as they age. Given the scale of the Alzheimer epidemic and the growing number of Americans directly affected every single day, NAPA will provide an essential framework within the government that recognizes the Alzheimer crisis is no longer emerging… but is here. Alzheimer’s — or the Grey Plague, as we’ve dubbed it — is a disease with no known cure. Robbed of memory, those who contract it die a slow and agonizing death while loved ones watch in horror. Each year the numbers of lives destroyed by it grow. And it’s easy to see why… The United States has a rapidly aging population. An estimated 7,000 boomers will turn 65 each day in 2011. Think about that for a minute… The current costs associated with AD are well into the billions. It’s no big surprise, then, that Alzheimer’s looms large on the radar screens of the major biotech companies. It’s a giant— and growing — market. One which is attracting more and more money in search of a cure. Anavex, just now entering Phase I, is in a unique position to attract the attention of the entire industry. In fact, it’s already started to do just that… You see, the second big development for Anavex came earlier in January when Alzheimer’s Weekly named ANAVEX 2-73 the promising clinical trial for 2011. According to the press release: Hoboken, NJ – January 6, 2011 — Anavex Life Sciences Corp. (“Anavex”, AVXL:OB) announced today that ANAVEX 2-73 has been named 2010’s “most promising trial drug” by the editorial staff at Alzheimer’s Weekly. The publication selected the ANAVEX 2-73 trial from a field of over 100 trials that treat dementias such as Alzheimer’s and following the review of more than 10,000 articles. Staffers and clinical experts of Alzheimer’s Weekly said that Anavex stands out when scrutinized against their key criteria for potential treatments, including small molecule drugs, oral bioavailability, possibility for disease modification, targeting multiple pathways, near-term availability and entering human trials. “It is extremely rewarding for our team to receive such significant and independent third-party recognition for ANAVEX 2-73 and our unique approach in Alzheimer’s disease,…

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Dividend Stock Leaders for the Week of Jan.18-21 (GE, MOS, MS, BAC, FCX, CLF, more)

Here are some of the biggest dividend stock winners and losers from the week that just ended. Company Fri. Close Weekly % Change Dividend Yield Pep Boys ( PBY ) $14.15 +7.28% 0.85% Lockheed Martin Corporation ( LMT ) $79.22 +6.34% 3.79% General Electric Company ( GE ) $19.74 +4.89% 2.84% Adtran Inc. ( ADTN ) $41.32 +4.87% 0.87% Oracle Corporation ( ORCL ) $32.51 +4.03% 0.62% Morgan Stanley ( MS ) $30.01 +3.55% 0.67% Peabody Energy Corporation ( BTU ) $58.17 -6.19% 0.58% Bank of America Corporation ( BAC ) $14.25 -6.56% 0.28% Cliffs Natural Resources ( CLF ) $81.66 -8.08% 0.69% Freeport-McMoran ( FCX ) $108.40 -8.41% 1.85% CF Industries Holdings Inc. ( CF ) $133.30 -8.87% 0.30% Sotheby’s Holdings Inc. ( BID ) $41.27 -9.04% 0.48% Mosaic Company (the) ( MOS ) $73.20 -11.78% 0.27% Hudson City Bancorp Inc. ( HCBK ) $11.25 -14.71% 5.33% Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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Bank of America (NYSE:BAC) Weighed Down by Countrywide Acquisition

Bank of America (NYSE:BAC) continues to be held back by their acquisition of Countrywide, which brought with it huge exposure to the home loan market. That has resulted in another quarterly loss for the financial giant, which lost $1.2 billion for the quarter.Bad home loans were by far the major loss for the bank in the reporting period. The loss was driven by a $2 billion writedown related to

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Raising the Debt Ceiling

Filed in BP, Debt, euro, european union, Gold, GOld juniors, Gold Market, lead, o, obama, silver, stimulus, target by on January 21, 2011 0 Comments
Raising the Debt Ceiling

The United States government seems to enjoy spending our money with the zeal of a rap star. They like it so much, in fact, that they’re going to need a little more from you… Last week, Treasury Secretary Timothy Geithner warned Congress that this year’s statutory limit on federal debt will be reached as early as spring — between March 31st and May 16th. Geithner alerted congressional leaders saying: Even a very short-term or limited default would have catastrophic economic consequences that would last for decades. For these reasons, I am requesting that Congress act to increase the limit early this year, well before the threat of default becomes imminent. I don’t buy it. We’ve already been down this road before… Bush’s TARP and Obama’s Economic Stimulus effectively did the same thing. And look what happened: more than 90% of the money went right to the banks, where it still resides. Bush and Obama did their jobs. They protected the banks at all costs. And that was, of course, the design from the start. To bring confidence back into the U.S. system, we’re simply going to have to cut out the reckless spending. This would point America in the right direction and reduce the risk of a default or devaluation that looms in our near future. Unfortunately, this does not appear to be the road our politicians want to take. ~~SIGNUP_WD~~ The trouble with this train wreck of a debt picture is that rates are going to have to go higher in the near future. That’s because the folks who have been buying our debt over the course of the last 30 years are no longer interested in our new debt offerings at current interest rates. Not only are they not interested in buying our new debt; but they’ve decided to dump the Treasury paper they already have. This puts the U.S. in a tricky situation. To make our obsessive borrowing more attractive, we’ll have to continue to raise rates. This is where things really start to go south… And the whole of society could fail because of unsustainable spending and debt scenarios at every level of government worldwide. This was typical of every other empire our world has ever known before their ultimate collapse: the Spanish, Greek, Roman, and British Empires all came to an end because they spent themselves into oblivion— just as the European Union, England, Japan, and the U.S. are doing today. Just consider how truly desperate some situations have become… Last week, the state of Illinois increased personal income tax by 66% and corporate income tax by 45%. These increases are designed to address a $15 billion state budget deficit that lawmakers said was leading the state into insolvency. How long is it before we start seeing headlines that include “State Bankruptcy”? On its current path, the United States could not possibly meet all of its future obligations. And the end game could mean collapse. That means as an investor, you need to get your ducks in a row. The

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Bank of America’s (NYSE:BAC) December Card Charge-offs Drop

Filed in bank of america, Debt, Gold Bullion prices, o by on January 18, 2011 0 Comments

Charge-offs for credit card debt at Bank of America (NYSE:BAC) dropped to its lowest levels for 2010 in December, said the giant bank. This type of debt is considered as noncollectable when it is written off by a financial institution. Also improving in December were credit-card late payments. For the month of December, Bank of America wrote off 9.31 percent of credit card balance, an

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