Major international media outlets continue to tout the U.S. economy as “solid”, “robust” and “accelerating”.
Retail Sales Review
5:15-7:10 discussion of the low retail figures in light of the supposed increase that was supposed to happen because of lower gas prices. Consumer spending is approximately 2/3 of GDP. Tepid spending will impact negatively the first quarter GDP. The dark side of lower gas prices is discussed-loss of high paying jobs, damage to shale oil companies and impact on oil derivatives.
The Main Stream Media Economic Cheerleaders
7:10:11:40 Discussion of the main stream media economic cheerleaders: Reuters, Bloomberg, AP and CNBC. Discussion of the words and phrases they use to report on economic data “solid” “strengthening labor market” “recovery” “U.S. economy continues to improve” “accelerating U.S. economy“. They fail to report on the data behind the top line numbers in job growth that indicate the growth is in part time jobs going to those 55 years and older and at the expense of a loss of full time jobs.
Recent wage growth which has been absent for years, is probably a function of new state minimum wage laws that increased the state required minimum wage in January. This increase in employee wage costs may cause a rise in an increase in jobless claims as companies begin to lay off workers.
“Still, cheaper gasoline prices and robust employment gains are expected to provide a powerful stimulus to consumer spending and keep the economy on an expansion path, despite sputtering growth in Asia and Europe.”
The “recovery” or “gains” are always projected to happen later.
BOFA and International Investing with Depositor Money
11:40-14:03 discussion of BOFA banking practices
Valuations of Un Profitable Companies in Silicon Valley
14:03-19:45 discussion of the sky high valuations of San Francisco Bay area companies that don’t earn any profits. Silicon Valley and Wall Street reward a growth story even if profits are absent. Because of this dynamic, money is not invested into companies that can make a profit and provide a lasting boost to the labor market and economy. Money instead flows into companies with a good story that can gain a high valuation in the stock market. Trulia and Zillow are discussed. Real estate sales have been flat the past five years, yet online real estate companies continue to gain in market capitalization.
The Role of Banks in an Economy
19:45- 23:30 Discussion of how the role of banks in the economy has gone from prudent stewards of capital to casino trading operations. Discussion of the high percentage of unprofitable companies doing initial public offerings. Discussion of Radio Shack bankruptcy and main stream media ignoring bad news.
The day the dismal consumer spending numbers and initial jobless claims came out, Yahoo featured these stories instead:
Here’s What Can ‘Slingshot’ Dow Toward 20K: CIO
Why You Should Own Apple
The media and Wall Street have focused on the only piece of ostensible good news recently-the growth in non farm payroll.
Rising Stock Prices are all that is Left of the Economic Recovery
23:30 -25:40 Home prices have stopped rising, but stock prices are still climbing so the media and Fed can still claim “recovery” and that the economy is “solid”. The correlation of the stock and bond markets and the economy is discussed.
Rising Car Sales and Flat Home Sales
25:40 -29:45 discussion of how low interest rates and sub prime lending has boosted car sales but not home sales. It’s easier to sell cars that are less expensive than homes and easier to repo a car than to foreclose a home. Discussion of sub prime lending.
29:45 31:45 Discussion of the limits to wage growth and share buy backs.
31:45-38:00 Amazon’s business model is discussed and how Wall Street funds its losses. Today’s public company investors can make money AS a company loses money. All the investors make money but the company doesn’t.
Banks and Lending Practices
38:00-43:20 discussion of why banks prefer trading operations to lending operations. Discussion of the rise of financial services from funders of companies that drove the economy to being a large percentage of the U.S. economy themselves.
Financial Repression and Baby Boomers
43:20 -46:45 financial repression is discussed. The economy depends on spin rather than actual numbers. One spin on the low labor participation rate is that aging baby boomers are leaving the work force. This is incorrect as they are staying longer in the work force because they can’t retire on interest income because it is too low and boomers are actually the ones getting the bulk of the part time jobs being created.
Boomers vs Millennials
46:45 49:40 Discussion of the age warfare between boomers and millennials.
49:40- Discussion of whether the Fed takes its orders from Congress, its too big to fail shareholders or is independent. Discussion of Ron and Rand Paul’s initiatives to audit the Federal Reserve and Elizabeth Warren’s opposition.
Mainstream Media Economic Cheerleading
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