Recovery Summer VII.

As the U.S. economy continues to decelerate, the Fed and main stream financial media continue to insist the slow down is “transitory” and weather related.

This week’s podcast discusses the absurdity of the wishful economic thinking that predominates among policy makers their media mouthpieces.

Podcast Summary:

0:00-4:55 Introduction

Initial Jobless Claims

4:55 -6:40 the most recent initial jobless claims number was one of the lowest in more than forty years. The initial jobless claims number, however, is not a good indicator of the health of the labor market. Fewer people getting fired does not mean more people are getting hired. Fewer people left in the labor of force means fewer people left to fire.

Discussion of the job growth in the 55+ age group and the decline in job growth for those aged 25-54.

The Three Legged Stool of the Economic Recovery

6:40-13:30 Discussion of the three data points the mainstream media and the Fed point to as evidence of an economic recovery: the job market, rising stock and real estate prices.

Real estate is no longer showing significant price increases or any meaningful sales growth nationwide. The stock market is hitting all time highs. The labor market is touted as an example of strength in the U.S. economy. The main stream media points to a decline in initial jobless claims as evidence that the economy on “solid footing”
Reuters makes this claim even though GDP, retail sales, industrial production and other economic indicators are flat or down.

Recovery Summer VII

The media is still clinging to the narrative that weak economic data in the first quarter was due to bad weather even though April economic data was equally poor or worse and that the economy will improve later in the year.

AP On Poor Retail Sales in April:

“Economists say sales should improve once STRONG JOB GROWTH FUELS an acceleration in wage growth”

The above statement is dissected.

Atlanta Fed President James Lockart recently claimed that he expected the economy to pick up even thought his own Atlanta Fed Now metric is tracking second quarter GDP growth at just .7%.

The European Union is actually growing faster than the United States. The EU is engaging in its own quantitative easing program, while the U.S. ended theirs in the fourth quarter of 2014.

Will the Fed Ever Admit that QE Didn’t Work?

13:40-20:00 Discussion of how the economic reports are spun to avoid admitting the dismal results. Discussion of the reasons that lower gas prices did not result in higher retail sales. The media commentators on CNBC have a vested interest in convincing the public that the economy is doing well.

Discussion of the state of the real estate market who owns and who doesn’t.

Minimum Wage

20:00-26:50 Discussion of the minimum wage. An increase in the minimum wage will not fuel the stock or real estate markets. Who “sets” the minimum wage?

Disrupting the Financial Markets

26:50-29:45 the financial sector of the U.S. economy has grown significantly over the past thirty years, mostly through trading, not by raising capital for fund companies. For a broad based economic recovery, disruption and decentralization of the financial services markets may need to take place. Discussion of the disruptive impact of Uber on the taxi industry.

Real Estate Market

29:45-34:00 discussion of the tepid real estate market on a national level vs certain limited areas that are experiencing booms (San Francisco, New York). Discussion of the Silicon Valley/Wall Street bubbles. The current stock and real estate bubbles are limited in scope to few people, unlike prior bubbles where there was broad based participation.

QE 4?

34:00-36:00 If the bubbles burst will the Fed return to quantitative easing? What excuses might be given if the Fed reverts to QE.

Infrastructure Spending in the Aftermath of the Amtrak Crash

36:00-38:10 the recent Amtrak train crash is discussed and the immediate call for more infrastructure spending.

Gold Storage

38:10 gold ownership and storage options outside the banking system and stock markets in insured private vaults is discussed. Gold stored outside the banking system protects against risk of a collapse of the banking system.

Discussion of the Exchange Traded Funds SLV and GLD. Gold as insurance is discussed.

What might happen to gold if it is included as part of the financial system? The booming art market is discussed. Warren Buffet’s relationship to government and the protection his portfolio gets from that relationship is discussed.

Recovery Summer VII Coming Soon – June 21 2015