This article appeared online at TheNewAmerican.com on Monday, April 30, 2018:
When the Bank of America (BofA) and Citigroup announced changes in their policies earlier this month restricting loans to companies that sell or manufacture firearms, Senator Mike Crapo (R-Idaho), chairman of the Senate Committee on Banking, Housing and Urban Affairs, sent a letter to the CEO of each bank:
This article appeared online at TheNewAmerican.com on Thursday, March 22, 2018:
Following the unanimous and much-anticipated decision by the Federal Reserve to raise interest rates by another quarter of a percent on Wednesday, the new chairman, Jerome Powell, said, “The economic outlook has strengthened in recent months. Several factors are supporting this outlook: fiscal policy [i.e., Trump’s tax cuts to individuals and corporations] has become more stimulative, ongoing job gains are boosting incomes and confidence, foreign growth is on a firm trajectory, and overall financial conditions remain accommodative.”
This raises the question:
This article was published by The McAlvany Intelligence Advisor on Friday, March 23, 2018:
Short-Run Phillips Curve before and after Expansionary Policy
In politics, according to FDR, there are no coincidences. He famously said that “in politics if something happens you can be sure it was planned that way.” The announcement by Trump that he has filed for reelection in 2020 and the pronouncement by the Federal Reserve following it may just be one of those “planned” coincidences.
The pronouncement from Jerome Powell, the new head of the Fed, was, on the surface, comforting:
This article was published by The McAlvany Intelligence Advisor on Wednesday, January 10, 2018:
Michael Snyder rivals only David Stockman in his pessimistic economic outlook, reflecting that outlook by naming his blog “The Economic Collapse.” On the first day of the New Year, Michael dug into his files for the most “crazy” numbers from 2017. He found 44, including these:
One out of every ten young adults in the United States has been homeless at some point over the past year;
The United States has lost more than 70,000 manufacturing facilities since China joined the WTO in 2001;
A total of 6,985 store locations were shut down last year, and we are expected to break the record again in 2018:
Only 25 percent of all Americans have more than $10,000 in savings right now; and
44 percent of all U.S. adults do not even have enough money “to cover an unexpected $400 expense,” according to the Federal Reserve.
What’s missing from Michael’s list? Credit card debt, student loan debt, and vehicle financing debt. Surely he was aware of these numbers, but for some reason didn’t include them in his list. For the first time in history, credit card debt last year hit $1 trillion, eclipsing the record set back in 2008 following the real estate collapse and the beginning of the Great Recession. Snyder didn’t mention the nearly $3 trillion in “non-revolving” debt (i.e., auto and student loans) either. Seeking Alpha called these numbers “scary” but Snyder ignored them.
A closer look behind the numbers reveals that these may not be such “scary” numbers after all. Perhaps that’s why Snyder ignored them, simply because, by his definition, they didn’t qualify as “crazy.” For one thing, fewer than 40 percent of all households carry any sort of credit card debt. Among millennials ages 18 to 29 only a third even have a credit card.
Next, the ratio of income to credit card debt at the end of 2017 (before the new tax cuts) was already declining with the ratio of credit card debt compared to the nation’s gross domestic economic output at about 5 percent, compared with 6.5 percent in 2008.
Also, credit card delinquencies remain way below the 9 percent historical average, at just 7.5 percent, and far below the rate of 15 percent touched following the 2008 financial crisis.
There’s another way to look at credit card debt: compare outstanding balances to incomes.ValuePenguin performed such a service, showing that households with annual incomes of between $25,000 and $100,000 have less than $7,000 in outstanding balances on their credit cards. Further, that analysis showed that the average has increased only slightly since 2013.
With almost two million more people working today than held jobs a year ago, and others enjoying wage and salary increases, that $1 trillion in credit card debt becomes far less “scary.” In a $20 trillion economy that is growing at three percent a year, $1 trillion in credit card debt may reflect that growth as banks are willing to issue more cards to more credit-worthy individuals and those individuals, having perhaps learned lessons from the Great Recession, are using them more prudently. That “trillion” dollar number may instead reflect a growing and increasingly healthy economy employing more people making more money who are using credit opportunities more wisely.
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Sources:
USAToday: Credit card debt hits new record, raising warning sign
SeekingAlpha.com: Credit card debt on watch
Michael Snyder: 44 Numbers From 2017 That Are Almost Too Crazy To Believe
ValuePenguin.com: Average Credit Card Debt in America: 2017 Facts & Figures
This article appeared online at TheNewAmerican.com on Tuesday, January 9, 2018:
For the first time in history credit card debt hit $1 trillion last year, reported the Federal Reserve on Monday. This eclipsed the previous record set almost 10 years ago, just before the housing and credit bubbles burst. In addition, “non-revolving” (i.e. auto and student loans) debt is approaching $3 trillion.
These numbers have put credit card debt on “watch” at Seeking Alpha, which said that that trillion dollar number is “scary.”
A closer look behind the numbers reveals that these may not be such “scary” numbers after all.
This article appeared online at TheNewAmerican.com on Wednesday, December 27, 2017:
Within hours of passage of the Tax Cuts and Jobs Act of 2017 (TCJA) on December 20, major American companies began announcing year-end bonuses, salary increases, and plans to expand capital investment. This was an unexpected but pleasant surprise to many, including House Speaker Paul Ryan, who tweeted: “It’s only been a few hours … and companies are already announcing new investments into the US economy & raises for their employees.”
Senator Tim Scott, Republican conservative from South Carolina, called its passage “a tremendous victory,” adding that it’s an “early Christmas present for the American people.”
Details of raises, bonuses, and capex expansion plans poured out of Comcast
This article was published by The McAlvany Intelligence Advisor on Wednesday, November 15, 2017:
Marxist Dictator Nicolas Maduro
Marxist Dictator Nicolas Maduro’s Venezuela owes the world an estimated $140 billion. It’s greatly diminished economy, thanks to his socialist policies, generates barely $400 billion in output. That puts its debt-to-GDP ratio at 35 percent.
The United States government, if government agencies are to be believed,
This article appeared online at TheNewAmerican.com on Friday, October 20, 2017:
Days after the fraudulent election of mayors in Venezuela, Marxist dictator Nicolás Maduro banned the five mayors from the opposition party from taking office. He replaced them with party hacks, all but ending any opposition to his increasingly repressive regime. The election, in which 17 of the 23 mayoral races went to Maduro supporters, was widely criticized for being manipulated in order to give the country’s dictator the win.
Evidence that the election was fraudulent provided by the opposition is being ignored, with the head of Maduro’s National Electoral Council, Tibisay Lucena, calling the elections
This article appeared online at TheNewAmerican.com on Wednesday, September 27, 2017:
Attorneys for the widow and children of Max Hopper, the developer of the SABRE reservation software used by American Airlines, wanted to deliver a message to JPMorgan. On Tuesday they got their wish. Their attorneys announced that not only did the six-member jury award them nearly $5 million in actual damages, plus another $5 million to cover their legal fees for bringing a lawsuit against the bank, the jury doubled what the family wanted in punitive damages. They wanted to make an impression on the bank that would be heard all way from Dallas to 270 Park Avenue, New York City, the bank’s headquarters.
The jurors, apparently so outraged after listening to the bank’s fraudulent, negligent, and malicious behavior toward Hopper’s widow and two children, decided to
This article was published by The McAlvany Intelligence Advisor on Friday, September 22, 2017:
Zig Ziglar speaking at the Get Motivated Seminar at the Cow Palace in Daly City, California.
When Zig Ziglar was trying to motivate salesmen, he would often tell them that “there aren’t very many problems that can’t be solved by sufficient production.” This, unfortunately, has been picked up by statist economists who have assumed that any production, at any cost, will solve any problem. Put another way, “We can grow our way out from under the massive debt we have. And we can grow the economy by stimulating it with borrowed funds.”
Zig would be appalled:
This article was published by The McAlvany Intelligence Advisor on Monday, September 11, 2017:
Cover of The Emperor’s New Clothes
Taken to its logical conclusion, William Dudley, the president of the Federal Reserve Bank of New York, thinks a flood covering all of the United States would stimulate the economy. Several sources confirmed that this is what Dudley said on Friday in an interview at CNBC concerning the economic effects of hurricanes Harvey and Irma:
This article appeared online at TheNewAmerican.com on Sunday, August 27, 2017:
On Friday President Donald Trump once again ramped up sanctions against Venezuela’s Marxist dictator, shutting off his ability to sell new debt or equity in the U.S. financial markets. On Saturday, Hurricane Harvey, the worst hurricane to hit the Gulf Coast in 50 years, has all but sealed Maduro’s fate.
Following Maduro’s installation of his illegal “constituent assembly” in July, President Trump placed sanctions on Maduro himself, freezing any and all of his assets lying within American jurisdiction. A week later Trump added a few of Maduro’s cronies to that list, and on August 9 he added a few more. At the time The New American expressed skepticism that they would have any effect on Maduro’s obstinacy and determination to continue policies that have caused Venezuela’s economy to shrink by 35 percent just since 2014.
On Friday the Trump administration broadened those sanctions to include
This article was published by The McAlvany Intelligence Advisor on Wednesday, August 16, 2017:
Zombies are often depicted as mindless, unthinking henchmen operating under the spell of an evil magician. A lot of that defines Operation Choke Point, a mindless, unconstitutional apparition invoked by the evil intentions of the previous administration to shut down gun stores, payday loan companies, tobacco sellers, and the like. Each of these was determined to be “disreputable” dictated by the totalitarian worldview of Obama and his henchmen.
Declared dead back in 2015, it lives. Back on January 29, 2015, the FDIC said it was dead:
This article was published by The McAlvany Intelligence Advisor on Friday, July 21, 2017:
It’s no wonder that investors owning bonds of companies in the energy business are getting nervous. They purchased high-yield bonds issued by them, seeking income when there was little to be had elsewhere. Last year they were rewarded with 38 percent gains in their holdings as the industry rebounded.
But in June Bloomberg reported that those same bondholders saw their values drop by two percent. This is on top of energy stocks that have tanked 16 percent so far this year.
It’s the vicious circle facing frackers.
This article appeared online at TheNewAmerican.com on Tuesday, July 18, 2017:
EnerVest Ltd., a Houston-based private equity firm run by John Walker, is being taken over by one of its largest lenders to satisfy its unpaid debts. The firm raised capital from large investors, foundations, and pension plans and bought existing oil wells, improved them, and sent the dividends back to the investors.
In 2011, it had come off a very successful year. It owned 19,000 onshore oil wells on four million acres of land in 12 states. Its previous investments delivered a compounded annual return of 36 percent, a track record that made it relatively easy for Walker to raise additional capital. In a classic understatement, Walker said, “We had an outstanding year.” He explained just how he and his company did it; he bought cheap and sold dear, without using borrowed funds:
This article appeared online at TheNewAmerican.com on Monday, July 17, 2017:
Wells Fargo
EnerVest Ltd., a Houston-based private equity firm run by John Walker, is being taken over by Wells Fargo, one of its largest lenders, to satisfy its unpaid debts. The firm raised capital from large investors, foundations, and pension plans and bought existing oil wells, improved them, and sent the dividends back to the investors.
In 2011, it had come off a very successful year. It owned 19,000 onshore oil wells on four million acres of land in 12 states. Its previous investments delivered a compounded annual return of 36 percent, a track record that made it relatively easy for Walker to raise additional capital. In a classic understatement, Walker said, “We had an outstanding year.” He explained just how he and his company did it; he bought cheap and sold dear, without using borrowed funds:
This article appeared online at TheNewAmerican.com on Monday, June 12, 2017:
Despite 97 percent of Puerto Ricans voting for statehood in Sunday’s plebescite, the chances of adding the island as the country’s 51st state are between slim and none.
The island’s voters had three choices on Sunday’s ballot: Stay as a U.S. territory, move ahead with statehood, or seek full independence as a sovereign nation. This is the fifth vote on the issue since 1967, with the first three failing to gain a majority vote for statehood. That majority is required for the U.S. Congress to consider it. The fourth vote was marred by some 500,000 voters boycotting it to protest the ballot allegedly being rigged in favor of statehood.
The chances this time aren’t any better.
This article was published by The McAlvany Intelligence Advisor on Friday, May 26, 2017:
Perhaps without knowing it, Moody’s downgrade of China one full notch on Wednesday exposed the fallacy of managed economies: that government bureaucrats with fancy degrees from the University of Chicago, Harvard, or Yale know what they’re doing. One of those fallacies that have been promoted for years came from Yale grad Arthur Laffer as far back as the Reagan administration. On the surface it sounds eminently logical: cut taxes and the economy will grow. The fallacy is knowing just how much to cut, whose to cut, when to cut, and how long to cut.
The Laffer Curve undergirds the whole idea of “supply side economics” –
This article appeared online at TheNewAmerican.com on Thursday, May 25, 2017:
China GDP
Moody’s Investors Service, one of the big three credit-rating services in the country, downgraded China’s creditworthiness one full notch on Wednesday. It moved the world’s second-largest economy from Aa3 (“high quality [with] very low risk”) to A1 (Upper-medium grade [with] low credit risk”). It explained why:
The downgrade reflects Moody’s expectations that China’s financial strength will erode somewhat over the coming years, with economy-wide debt continuing to grow as potential growth slows.
That “potential growth” has been slowing since at least 2010. In that year Chinese government agencies reported growth in excess of 10 percent. By 2014, it had slowed to 7.3 percent, to 6.9 percent in 2015, and is now at a reported 6.7 percent.
Moody’s is late to the game.
This article appeared online at TheNewAmerican.com on Thursday, April 27, 2017:
By declining to hear an appeal, the Supreme Court on Monday essentially declared that rules protecting the taxi cartel in Chicago were null and void, thus expanding passenger freedom. As an attorney with the Institute for Justice (IJ), which represented Chicago Uber driver Dan Burgess, explained: “Today’s decision makes clear what [IJ] has said for years. The Constitution does not require [city] governments to stick with outdated protectionist regulations in the face of technological innovation.”
When Uber and other ride-sharing companies entered the Chicago market several years ago, they soon became a thorn in the side of the taxi cartel that had operated under protectionist rules dating back to 1937. Those rules
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