Obama Plans To Cut The Deficit By $1 Trillion As We Lay Claim To 100% Jupiter Ownership
According to The Congressional Budget Office, should Obama’s budget pass, it will cut the deficit by $1 trillion over the next 10 years. While an admirable effort and a step in the direction, it is not rooted in reality. Here is why. The CBO projections do not account for recessions, let alone a massive recession we anticipate over the next few years. They simply project today’s highly inflated (bubble level) data for decades into the future. Yet, when a bear market and a subsequent severe recession of 2014-2017 starts any projected cuts will very quickly turn into deficit spending. Unfortunately, any deficit reduction ain’t nothing but a pipe dream.
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Obama Plans To Cut The Deficit By $1 Trillion As We Lay Claim To 100% Jupiter Ownership Google
CNN Money Writes: Obama would cut deficits by another $1 trillion
The official nonpartisan take on President Obama’s 2015 budget proposal is in: He would curb deficits even more than today’s policies.
The Congressional Budget Office on Thursday said Obama’s budget would reduce annual deficits by about $1 trillion more than CBO projects over the next 10 years.
It would do so by raising about $1.4 trillion more in revenue, while also raising noninterest spending by $446 billion, the CBO noted in its analysis.
The net effect: The country’s accumulated debt, currently about 74% of the size of the economy, would grow in dollar terms but still remain at 74% of GDP by 2024.
Here are some of Obama’s proposals with the biggest effects on the federal budget:
Limit tax breaks for high income households: The biggest revenue raiser is Obama’s proposal to limit the value of itemized deductions, as well as certain tax exclusions, to 28% of the amount claimed.
The plan, estimated to raise $498 billion over a decade, would hit mostly individuals who make more than $200,000 and married couples who bring in more than $250,000.
Immigration reform: The president called for comprehensive immigration reform, a proposal broadly similar to a bill the Senate passed last year. CBO estimated that legislation would raise $456 billion in new revenue and raise spending by $298 billion.
The rise in legal immigrants and the U.S. population overall would increase spending on refundable tax credits, Medicaid and health insurance subsidies, among other federal benefits. And it would increase spending for the implementation and enforcement of the bill’s provisions.
But it would also create even more tax revenue by way of income and payroll taxes, the agency had noted.
Less overseas military funding: The president wants to spend $659 billion less on overseas contingency operations, such as those in Afghanistan, than would occur under current policies.
Raise other spending caps: Obama would eliminate automatic spending reductions scheduled to take place between 2016 and 2021, and raise spending caps through 2021 for most discretionary programs. But he would also keep those caps in place through 2024.
On net, these proposals would increase spending by $433 billion (or 4%) over the next decade.
Putin Will Make The West Bleed It’s Own Blood
Don’t get on Putin’s bad side or he will make you bleed your own blood. According to Mr. Putin there is nothing the West can do against Mother Russia without blowing up their own economies or the dollar first.
- “Can Europe stop buying Russian gas? I think it’s impossible…Will they make themselves bleed? That’s hard to imagine,” the Russian president said.
- “If prices decrease in the global market, the emerging shale industry in the US will die,” Putin said.
- If the West tries to damage Russia’s influence in the world energy market, efforts will likely backfire as dollar declines further. the Russian President said during his twelfth annual televised question and answer session.
Does Putin have a point? Absolutely. In fact, I give Mr. Putin 5 stars for his economic wisdom. My only correction is that the US Government/FED wants to devalue the dollar as fast as possible to usher in inflation. Otherwise, Putin has the entire EU in his grip as he can, indeed, make them bleed their own blood at his discretion.
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Putin Will Make The West Bleed It’s Own Blood Google
RT Writes: Putin says oil wars with Russia will make West bleed
Opportunities for the West to hurt the Russian economy are limited, President Vladimir Putin said Thursday. Europe cannot stop buying Russian gas without inflicting pain on itself, and if the US tries to lower oil prices, the dollar will suffer.
If the West tries to damage Russia’s influence in the world energy market, efforts will likely backfire, the Russian President said during his twelfth annual televised question and answer session.
To really influence the world oil market a country would need to increase production and cut prices, which currently only Saudi Arabia could afford, Putin said.
The president added he didn’t expect Saudi Arabia, which has “very kind relations” with Russia, will choose to cut prices, that could also damage its own economy.
If world oil production increases, the price could go down to about $85 per barrel. “For us the price fall from $90 to $85 per barrel isn’t critical,” Putin said, adding that for Saudi Arabia it would be more sensitive.
Also the President said that being an OPEC member, Saudi Arabia would need to coordinate its action with the organization, which “is very complicated.”
Meanwhile, Russia supplies about a third of Europe’s energy needs, said Putin. Finland, for example, is close to Russia economically, as it receives 70 percent of its gas from Russia.
“Can Europe stop buying Russian gas? I think it’s impossible…Will they make themselves bleed? That’s hard to imagine,” the Russian president said.
Since oil is sold internationally on global markets cutting the price would mean lower dollar circulation, diminishing its value in the global currency market.
“If prices decrease in the global market, the emerging shale industry will die,” Putin said.
The US shale industry has boosted domestic production, helping the US become independent and situating it to overtake Russia as a producer.
Russia’s economy largely relies on energy. In 2013 more than 50 percent of the national budget was funded by gas and oil revenues. The main revenue comes from oil, as last year, oil revenues reached $191 billion, and gas $28 billion.
“Oil and gas revenues are a big contribution to the Russian budget, a big part for us when we decide on our government programs, and of course, meeting our social obligations,” the president said.
The Rich Got Richer, The Poor Got Poorer….How Long Before The Next American Revolution Starts?
We have covered this topic in great detail in the past Say Goodbye To Income Equality, 46.5 Million Americans Live In Poverty. Blame The US Government or Guillotine Sales About To Surge. According to the WSJ report below…
The economist mined Labor Department data to show that the top 20% of earners accounted for more than 80% of the rise in household income from 2008-2012. Income fell for the bottom 20%.“While average income has returned to pre-recession levels, income gains have been distributed unevenly,” Mr. Cobet said.
And there lies the problem with the overall US Economy and the upcoming severe recession of 2014-2017. Those who study finance or financial markets know that there are no free lunches. Sooner or later you have to pay the piper for financial misdeeds and capital missallocation. No economy can grow over an extended period of time when only the top 20% of the population benefits…..thanks to misguided FED policies. While the top 20% are enjoying their rewards for the time being, the upcoming bear market of 2014-2017 will impact them the most (unless they go short at the right time).
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THE WSJ: Wealthiest Households Accounted for 80% of Rise in Incomes In Recession’s Aftermath
The rich got richer, the poor got poorer.
A recent article by Labor Department senior economist Aaron Cobet highlights the sharp disparity between the wealthiest and poorest Americans in the aftermath of the 2007-2009 recession.
“While average income has returned to pre-recession levels, income gains have been distributed unevenly,” Mr. Cobet said.
The economist mined Labor Department data to show that the top 20% of earners accounted for more than 80% of the rise in household income from 2008-2012. Income fell for the bottom 20%.
That had a direct impact on spending. The top households increased spending by about $2,300 from 2008-2012, notably on health care, transportation and education. The 20% of households with the lowest incomes cut spending by about $150.
“The decline in spending was due to lower expenditures on apparel—specifically women’s apparel,” Mr. Cobet said. Entertainment, housing, personal care, insurance, alcohol and reading also took a hit.
The International Monetary Fund has warned that rising income inequality is weighing on global growth. And President Barack Obama has made America’s income inequality a focal point of his second-term agenda.
Republicans have resisted one proposal to help workers with low incomes: raising the minimum wage. GOP lawmakers say such a step will lead to job losses and do little to spur growth.
Why You Should Avoid Going To Wharton At Any Cost
As you know, I am not a strong proponent of higher education. Outside of building a network of connections, most schools are incredibly overpriced and worthless for what they have to offer in return. Yet, when a professor of finance at Wharton School of Business (considered to be one of the best in the Nation) opens his mouth and starts to spit out complete bullshit that has no application in the real world, you have got to wonder how far our economic/financial education has declined. One thing in certain, you should avoid going to Wharton if that’s the advice you are going to get. If such thinking is applied to money management, one’s portfolio would be down over 50% in a matter of months. Read the article below and decide for yourself.
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Why You Should Avoid Going To Wharton At Any Cost Google
CNBC: Is America giving up?: Wharton professor
In real terms, the U.S. economy expanded by a total of $290 billion dollars in 2013. With some minor adjustments, that’s essentially the amount of extra income created by the nation as a whole. It also represents the increase in the purchasing power of its residents.
By comparison, China’s economy added over $800 billion dollars to its citizens spending power during 2013 alone. That’s an extra $800 billion that is now available for Chinese households to purchase new products and services or to save and help fund new ideas and technologies. At this rate, China is expected to overtake the U.S. as the largest marketplace in the world by the end of the decade.
This is not just about statistics. It is about our quality of life and how long we will live. It is about where our children will want to live and who will be our neighbors in the future.
While entrepreneurs in the U.S. are focused on “disrupting” established products and industries, working in China raises no such concerns. With so much extra income being generated every year, there is plenty of space for the new and latest.
With prospects for success – and its sizable rewards – so much greater in China, our ability to attract and retain the best and brightest will be seriously tested. Although Americans may not be moving anytime soon, fewer young and talented Asians are now interested in pursuing their careers in the U.S.
What can be done?
A lot is beyond our control. China is already large and is still growing quickly. Although the pace is starting to slow, the yuan is still undervalued by perhaps 10 percent or 15 percent, and it is hard not to see its economy making similar size gains for the rest of the decade.
But the U.S. can and should grow faster. It needs to grow faster. For demographic and budgetary reasons. And also to ensure it remains an attractive place for biotechnology, communications, electronics and other forms of frontier knowledge. Low growth perpetuates itself.
How do we grow faster?
Between the end of World War II and the beginning of the last recession, in 2007, economic growth in the U.S. averaged nearly 3 percent per year. Most of this was due to average labor productivity, which expanded at about 2 percent per year. In addition, the total number of hours worked also grew by 1 percent per year, in line with the overall growth in population.
Unfortunately all these numbers have fallen sharply in the last few years. Some of this is surely cyclical. But much is beginning to look structural. The Congressional Budget Office now estimates that U.S. economic growth will remain below post-war levels well into the next decade. GDP growth is expected to settle at only about 2.2 percent per year. Annual labor productivity growth should slow to 1.6 percent while the growth in total hours worked will fall to just 0.6 percent per year. Since population growth will continue unabated well into the next few decades, this means that the average American is expected to work less and less.
The decline in working hours has been happening for quite some time now. More precisely, after adjusting for population growth, fewer and fewer Americans are working, or even trying to work. In 1999, at the height of the tech boom, over 74 percent of working-age Americans were employed. The same ratio is now 67.4 percent. That represents a loss of about 14 million workers. It also appears that those still at work are also working slightly fewer hours, although the evidence is less clear.
Reversing this trend has to be a priority for the next administration. And virtually every major domestic policy debate should be viewed from this perspective. Any policy reform that fails to deal with this issue has to be seen as an outright failure.
For example, the ongoing changes in health care law may or may not lead to improvements in the provision of quality medical care. However, their impact on the labor market is nothing short of disastrous. Once fully implemented, income-linked subsidies for individuals, combined with the employer mandates and various tax penalties, are estimated to cost us a minimum of another 2.5 million full time jobs. The prospect of increased worker mobility due to the portability of health insurance is a positive outcome. But under current law I doubt this particular feature will matter very much.
Reforming Social Security and immigration are two other major unresolved policy issues that will have a large impact on the incentives for households to work, on job creation, and ultimately the U.S. economy’s growth potential. These have to be our primary focus.
Unless we just don’t care anymore.
Hedge Fund Performance In Q-1 Worst Since 2008
Hedge funds are under performing as per Bloomberg report below.
Hedge funds posted their worst first-quarter results since 2008, according to financial data service Preqin, whose “All Hedge Fund Strategies” index shows a gain of 1.2 percent since the start of the year. That compares with a 1.8 percent total return for the Standard & Poor’s 500-stock index through March 31. Hedge funds have badly trailed plain-vanilla equities over the past 12 months, gaining 8.53 percent vs. 19.32 percent for the S&P. In 2013, the gap between hedge funds and stocks was the widest since 2005.
Well, not this one. We were able to beat the pants off the market by 8.9% in Q-1 by implementing a very simple and risk averse strategy. From my vantage point it is too soon to judge the overall performance of hedge funds. The market must go through a down cycle before true hedge fund performance is revealed. The next 3 years will give us the opportunity to experience just that (The bear market of 2014-2017). If you are considering investing in a hedge fund, concentrate on the money manager first and the strategy/performance second. It will pay off in the long run.
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Hedge Fund Performance In Q-1 Worst Since 2008 Google
Bloomberg: Hedge Funds Post Worst First-Quarter Results Since 2008
It’s time again for another installment of “Hedge Funds Are a Ripoff,” our long–running series chronicling the asset class’s habit of underperforming far less exotic investments while charging more and limiting clients’ access to their own money.
Hedge funds posted their worst first-quarter results since 2008, according to financial data service Preqin, whose “All Hedge Fund Strategies” index shows a gain of 1.2 percent since the start of the year. That compares with a 1.8 percent total return for the Standard & Poor’s 500-stock index through March 31. Hedge funds have badly trailed plain-vanilla equities over the past 12 months, gaining 8.53 percent vs. 19.32 percent for the S&P. In 2013, the gap between hedge funds and stocks was the widest since 2005.
Defenders of hedge funds often get exasperated when the asset class gets compared with stocks: The investments are not supposed to outperform equities when the market is on a tear, this argument goes—they operate complicated strategies thathedge against lots of contingencies, so that they do well in all types of weather. Well, nobody would call 2014 a bull market, and hedge funds aren’t exactly shining now, either
This chart shows first-quarter returns for the S&P, the HFRX Global Hedge Fund Index, and the Global X Guru Index ETF, an exchange-traded fund that tries to recreate the performance of select hedge fund managers:
Long/short hedge funds, which bet on some stocks to rise and others to fall, may have missed a chance to create some separation during the market’s April slide. As technology stocks led the selloff, short sellers were nowhere to be found, Bloomberg reported April 14. Short interest in Facebook (FB), Netflix (NFLX), and other companies has plummeted to 1 percent or less, missing out on profiting from price declines approaching 20 percent. “Most people told me they’re scared to death to short,” John Thompson, the chief investment officer at hedge fund Vilas Capital Management, told Bloomberg. “They’re acting on fear instead of logic.” This kind of perfectly mistimed trading is supposed to be the hallmark of ordinary investors, not the hedge fund managers who command extravagant compensation for their supposed expertise
Janet Yellen: Bubbles? What Bubbles?
As per Bloomberg report below, Janet Yellen said nothing about the risk that her easy monetary policy will inflate asset bubbles. DUH!? What Bloomberg missed is that we are already in a massive bubble or bubbles. While the primary bubble is singular in nature….CREDIT……adjacent bubbles are too numerous to mention here (stock market, real estate, bonds, car loans, student debt, etc…) In fact, the situation we face today is not that dissimilar from the situation we had faced at 2007 top. It is almost identical and I challenge anyone to prove me otherwise.
Is the FED aware of these bubbles while hoping for the best or are they completely blind? Unfortunately, I continue to maintain it’s the latter. As I have mentioned before, their 2008 FED Minutes is a clear indication of that. They are a reactionary force at best, only able to correct the direction after the fact. Somehow, the markets believe that the FED possesses a supernatural power to control and to direct the markets. And that is why I continue to maintain that market participants with such a view will pay dearly for their misconception over the next few years.
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Janet Yellen: Bubbles? What Bubbles? Google
Bloomberg Writes: Dovish Sign? Janet Yellen Says Nothing About Asset Bubbles
Sometimes what’s not said is more important than what’s said. In a speech today, Federal Reserve chief Janet Yellen said nothing about the risk that easy monetary policy will inflate asset bubbles. Leaving that topic out of her speech could be taken as a sign that bubbles are not at the top of her list of concerns—which could make her more willing to keep interest rates low to strengthen economic growth.
Yellen certainly knows that asset bubbles are on the minds of investors and analysts. They’ve been a prime concern of one of her Federal Reserve Board colleagues, Jeremy Stein, who announced earlier this month that he will resign on May 28 to return to teaching at Harvard University.
She certainly had the time and opportunity to bring up bubbles. Her prepared remarks to the Economic Club of New York were 3,830 words long and were followed by extensive remarks in a question-and-answer session.
Last November, in her confirmation hearing for the Fed chairmanship, Yellen toldthe Senate Banking Committee that the Fed is devoting “a good deal of time and attention to monitoring asset prices in diferent sectors” to see if bubbles are forming. Even then she didn’t seem exceptionally worried. She said, “I don’t see evidence at this point in major sectors of asset-price misalignments, at least of a level that would threaten financial instability.”
The Financial Times’ Cardiff Garcia also made note of the curious incident today. He wrote, “In this speech, financial stability concerns weren’t raised at all.”
Obama’s Backed Ukrainian Forces Try To Scare Terrorist Peasants Into Submission
Would you like to witness your tax dollars at work? Watch this Ukrainian Mig-29 Jet play chicken with a tree to try and scare Pro-Russian terrorists into submission. Something tells me the jet fuel for the plane was bought and paid for by the good old boys at the CIA. Thanks Obama. Unfortunately, zero fucks were given by the guy on the phone smoking a cigarette, clearly he was not impressed. Come on Obama, you can do better than that.
Asia’s Wealthiest Man Is Selling Everything In China. Crash Coming?
With his net worth well in excess of $30 Billion, Li Ka-Shing is the richest man in Asia. A shrewd property investor, Li made most of his billions by investing in Chinese property market. Yet, unbeknownst to most, Li has been liquidating most of his property holdings in China since last year. With recently completed sale of Pacific Place shopping center in Beijing for $928 million, Li now has no assets of significant value left in or exposed to the Chinese market.
So, what does Li sees that has caused him enough concern to liquidate most of his holdings?
Same thing that we have mentioned on this blog.( Where Is China’s Hidden Debt Bomb) China is on a verge of a massive credit seizure that should (in theory) collapse it’s real estate, banking, shadow banking, capital missallocationg and credit bubbles. When it does, you will see China go through a massive economic slowdown and a possible revolutionary regime change. While most people will dismiss this view as highly improbable (anticipating a soft landing at best), Asia’s richest (and arguably the smartest) man just voted with his wallet. As they say, money talks and bullshit walks.
In fact, watch Li buy his Pacific Place mall back for $100 Million within the next 5 years.
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Asia’s Wealthiest Man Is Selling Everything In China. Crash Coming? Google
The richest man in Asia is selling everything in China
Sovereign Valley Farm, Chile
Here’s a guy you want to bet on– Li Ka-Shing.
Li is reportedly the richest person in Asia with a net worth well in excess of $30 billion, much of which he made being a shrewd property investor.
Li Ka-Shing was investing in mainland China back in the early 90s, way back before it became the trendy thing to do. Now, Li wants out of China. All of it.
Since August of last year, he’s dumped billions of dollars worth of his Chinese holdings. The latest is the $928 million sale of the Pacific Place shopping center in Beijing– this deal was inked just days ago.
Once the deal concludes, Li will no longer have any major property investments in mainland China.
This isn’t a person who became wealthy by being flippant and scared. So what does he see that nobody else seems to be paying much attention to?
Simple. China’s credit crunch.
After years of unprecedented monetary expansion that has put the economy in a precarious state, the Chinese government has been desperately trying to reign in credit growth.
The shadow banking system alone is now worth 84% of GDP according to an estimate by JP Morgan. The IMF pegs total private credit at 230% of GDP, jumping by 100% in the last few years.
Historically, growth rates of these proportions have nearly always been followed by severe financial crises. And Chinese leaders are doing their best to engineer a ‘soft landing’.
If they’re successful, the world will only see major drops in global growth, stocks, property, and commodity prices.
If they fail, the spillover could become pandemic.
This isn’t important just for Asian property tycoons like Li Ka-Shing. Even if you don’t know Guangzhou from Hangzhou from Quanzhou, there are implications for the entire world.
Here in Chile is a great example.
Chile is among the top copper producers worldwide, China among its top consumers. With a major slowdown in China, however, copper prices have dropped considerably.
Consequently, the Chilean economy has slowed. The peso is down nearly 10% against the US dollar in recent months, and the central bank is slashing rates trying to prop up growth.
There are similar situations playing out across the globe.
Not to mention, China could put the entire global financial system on its back just by dumping a portion of its Treasuries in order to defend the yuan.
Now, you’d think that a major credit crunch with far-reaching consequences in the world’s second largest economy, its largest manufacturer, and its largest holder of US dollar reserves, would be constant front-page news.
But it’s not.
Most traditional investors are unaware that what’s happening in China will likely have far greater implications to their investment portfolios than the policies of Janet Yellen and Barack Obama combined. At least for now.
And folks who don’t see this coming and keep buying at the all-time high may see their portfolios turned upside down. Quickly.
At the same time, some investors who are conservative and cashed up may realize a real ‘blood in the streets’ moment.
Again, using Chile as an example, I’m starting to see over-leveraged property owners coming to the market in droves ready to make a deal. This is great news because my shareholders and I are able to buy far more property with US dollars than we could even just six months ago.
I expect this trend to hold given that China is just at the beginning of its process.
It’s said that the Chinese word for “crisis” is a combination of “danger” and “opportunity”.
This isn’t entirely accurate. ‘Weiji’ can have several meanings, but is probably best translated as ‘dangerous’ and ‘crucial point’.
We may certainly be at that crucial point, and now might be a good time to take another look at your finances and consider selling before a major crash. The richest man in Asia certainly thinks so.
Is Nasdaq Set For A Massive Sell Off? What This Chart Shows Will Send Chills Down Your Spine
Talking Numbers asks……Is Nasdaq set up for a big decline? You don’t have to be a master technician to see that the Nasdaq chart is starting to look troublesome. On Tuesday of this week the Nasdaq tested both it’s 200 day moving average and it’s February 5th low of 3968, bouncing off of both like a cork. Thus far. If the Nasdaq breaks below this very important level, there is very little support until it hits 2,800 or a 33% decline from today’s levels.
So, will the Nasdaq break the support and head south…way south?
Based on our mathematical and timing work the answer is….. YES. While I am not going to provide you with neither timing nor price targets (available only to our subscribers), I am going to warn you that the bear market of 2014-2017 is just around the corner. When it starts it will very quickly retrace most of the gains accrued over the last 2 years. If you would be interested in learning exactly when this bear market will start (to the day) and its subsequent internal composition, please Click Here.
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Is Nasdaq Set For A Massive Sell Off? What This Chart Show Will Send Chills Down Your Spine Google
Why the Nasdaq could be setting up for a big decline
Talk about a textbook bounce.
After nearing a 10 percent correction, the Nasdaq Composite touched its 200-day moving average and has since rallied 140-points (and who said technicals don’t matter?).
“There’s a reason why we look at the 200-day on almost every chart here on Talking Numbers, because it works. It’s worked for over 100 years and yesterday was a great example,” said Richard Ross of Auerbach Grayson
So, will the support hold? And is the correction over?
According to Ross, we aren’t out of the woods just yet. “I see some short-term upside, but I think resistance is going to come back into play up around 4,150,” he said, comparing the recent action in the Nasdaq to that of 2011. “Back then, we saw a head and shoulders top, which ultimately lead to a 20 percent decline. Ultimately I think we move significantly lower.”
Gina Sanchez, CNBC Contributor and Founder of Chantico Global agrees that the Nasdaq could head lower, noting the recent decline in momentum stocks such as Netflix and Tesla play a role. “The highest P/E stocks are getting destroyed. And there you have plenty of room to go [down],” she said. “There’s definitely more P/E vulnerability than I think people are owning right now.”