perceptions_now wrote on Dec 19^th, 2011 at 4:40pm:



Hopefully their offices were on the ground floor.

I wonder why the Aussie stock market took such a drop today. The number of negative reports coming out of Europe are escalating, maybe that? maybe nothing and they'll be back up tomorrow.

50 Economic Numbers From 2011 That Are Almost Too Crazy To Believe

Even though most Americans have become very frustrated with this economy, the reality is that the vast majority of them still have no idea just how bad our economic decline has been or how much trouble we are going to be in if we don't make dramatic changes immediately.  Just "tweaking" things here and there is not going to fix this economy.  We truly do need a fundamental change in direction.  America is consuming far more wealth than it is producing and our debt is absolutely exploding. 

Hopefully many of you will use the list below as a tool to help you share the reality of the U.S. economic crisis with your family and friends.  If we all work together, hopefully we can get millions of people to wake up and realize that "business as usual" will result in a national economic apocalypse.

The following are 50 economic numbers from 2011 that are almost too crazy to believe....
#1 A staggering 48 percent of all Americans are either considered to be "low income" or are living in poverty.

#2 Approximately 57 percent of all children in the United States are living in homes that are either considered to be "low income" or impoverished.

#3 If the number of Americans that "wanted jobs" was the same today as it was back in 2007, the "official" unemployment rate put out by the U.S. government would be up to 11 percent.

#4 The average amount of time that a worker stays unemployed in the United States is now over 40 weeks.

#5 One recent survey found that 77 percent of all U.S. small businesses do not plan to hire any more workers.

#6 There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.

#7 Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

#8 According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006.  Today, that number has shrunk to 14.5 million.

#9 A Gallup poll from earlier this year found that approximately one out of every five Americans that do have a job consider themselves to be underemployed.

#10 According to author Paul Osterman, about 20 percent of all U.S. adults are currently working jobs that pay poverty-level wages.

#11 Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

#12 Back in 1969, 95 percent of all men between the ages of 25 and 54 had a job.  In July, only 81.2 percent of men in that age group had a job.

#13 One recent survey found that one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job.

#14 The Federal Reserve recently announced that the total net worth of U.S. households declined by 4.1 percent in the 3rd quarter of 2011 alone.

#15 According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.

#16 As the economy has slowed down, so has the number of marriages.  According to a Pew Research Center analysis, only 51 percent of all Americans that are at least 18 years old are currently married.  Back in 1960, 72 percent of all U.S. adults were married.

#17 The U.S. Postal Service has lost more than 5 billion dollars over the past year.

#18 In Stockton, California home prices have declined 64 percent from where they were at when the housing market peaked.

#19 Nevada has had the highest foreclosure rate in the nation for 59 months in a row.

#20 If you can believe it, the median price of a home in Detroit is now just $6000.

#21 According to the U.S. Census Bureau, 18 percent of all homes in the state of Florida are sitting vacant.  That figure is 63 percent larger than it was just ten years ago.

#22 New home construction in the United States is on pace to set a brand new all-time record low in 2011.

#23 As I have written about previously, 19 percent of all American men between the ages of 25 and 34 are now living with their parents.

#24 Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.

#25 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980.  Today they account for approximately 16.3%.

#26 One study found that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt.

#27 If you can believe it, one out of every seven Americans has at least 10 credit cards.

#28 The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#29 It is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars.

#30 The retirement crisis in the United States just continues to get worse.  According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

#31 Today, one out of every six elderly Americans lives below the federal poverty line.

#32 According to a study that was just released, CEO pay at America's biggest companies rose by 36.5% in just one recent 12 month period.

#33 Today, the "too big to fail" banks are larger than ever.  The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.

#34 The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to the bottom 30 percent of all Americans combined.

#35 According to an analysis of Census Bureau data done by the Pew Research Center, the median net worth for households led by someone 65 years of age or older is 47 times greater than the median net worth for households led by someone under the age of 35.

#36 If you can believe it, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.

#37 A higher percentage of Americans is living in extreme poverty (6.7%) than has ever been measured before.

#38 Child homelessness in the United States is now 33 percent higher than it was back in 2007.

#39 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.

#40 Sadly, child poverty is absolutely exploding all over America.  According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.

#41 Today, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.

#42 In 1980, government transfer payments accounted for just 11.7% of all income.  Today, government transfer payments account for more than 18 percent of all income.

#43 A staggering 48.5% of all Americans live in a household that receives some form of government benefits.  Back in 1983, that number was below 30 percent.

#44 Right now, spending by the federal government accounts for about 24 percent of GDP.  Back in 2001, it accounted for just 18 percent.

#45 For fiscal year 2011, the U.S. federal government had a budget deficit of nearly 1.3 trillion dollars.  That was the third year in a row that our budget deficit has topped one trillion dollars.

#46 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.

#47 Amazingly, the U.S. government has now accumulated a total debt of 15 trillion dollars.  When Barack Obama first took office the national debt was just 10.6 trillion dollars.

#48 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

#49 The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.

#50 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

Of course the heart of our economic problems is the Federal Reserve.  The Federal Reserve is a perpetual debt machine, it has almost completely destroyed the value of the U.S. dollar and it has an absolutely nightmarish track record of incompetence.  

Hopefully next year more Americans than ever will wake up, because 2012 is going to represent a huge turning point for this country.

Link -
http://beforeitsnews.com/story/1514/540/NL/?currentSplittedPage=0
==================================
When combined with the situations in the other big Economic blocks, such as Europe & China, it becomes a little easier to see the BIG PICTURE?

Of course, in looking at the BIG PICTURE, it also helps to look at the BIG ECONOMIC DRIVERS -
1) Demographics - Aging Baby boomers and a slowing Total Population Growth, ahead of an actual Population Decline.
2) Peak Energy - Specifically Oil for now.
3) Peak Debt - With Many countries approaching a Debt to GDP ratio of 100%.
4) Climate Change - This will create Food shortages & a self re-enforcing adverse feedback loop, in terms of Economic Demand! 

Links for supporting data are in the original article.

DOW up 334 on Hopium!

The DOW had a big rise overnight, based on hope, arising from US Construction figures and the OZ market has dutifully risen today, in sympathy.

That said, I would counsel against getting overly excited about a new boom, any time soon, given the longer term influence of the major Economic factors, which are predominantly negative!

To illustrate what I'm saying above, the following article by a US Funds manager, John Hussman.
=================================

When "Positive Surprises" Are Surprisingly Meaningless

In order to properly understand economic "surprises," it's important to recognize that unlike actual economic data, where fluctuations have to do with, well, the actual economy, economic surprises are - by definition - measured relative to the subjective expectations of economists and Wall Street analysts. Unfortunately, analysts tend to be all-or-none. Instead of allowing for a normal ebb-and-flow of data, they form expectations that overshoot both on the pessimistic side and on the optimistic side. As a result, once the economy experiences an initial softening, expectations turn lower, often very aggressively. Over the following weeks, economic data can continue to be fairly soft, but because expectations have collapsed, the new data is interpreted as being "above expectations." After a while, that experience of positive surprises causes analysts to over-correct by forming overly optimistic expectations, which is predictably followed by a period where the data, unless it is spectacular, almost cannot help but disappoint.

My observation is that this cycle of optimism and pessimism tends to run just over 20 weeks in each direction, though that is certainly not a magic number of any kind, and is best interpreted as a tendency.

"Historians would notice that all major equity bubbles (like those in the U.S. in 1929 and 1965 and in Japan in 1989) broke way below trend line values and stayed there for years.

GMO has looked at the 10 biggest bubbles of the pre-2000 era and has calculated that it typically takes 14 years to recover to the old trend.

"For the record, Exhibit 1 shows what the S&P 500 might look like from today if it followed the average flight path of the 10 burst bubbles described above. Not very pretty."


We can't disagree, though I also believe there still remains some short-run ability of policymakers to distort market forces, to badly misallocate capital in the process, and to wreck the economy more thoroughly in the long-run.

My suspicion is that analysts whose understanding of the investment markets is based solely on experience since the 1990's have absolutely no idea how far outside of that sample most of history lives.

Facing a global economic downturn
In the past few months, our own measures of economic risk have remained persistently unfavorable, as have the indications from the Economic Cycle Research Institute (ECRI).

I suspect that we are on the cusp of observable economic deterioration.

To extend the evidence beyond our own measures and ECRI's analysis, the chart below presents data (through October) from the Organization for Economic Cooperation and Development, an international quasi-governmental agency that sets international standards on a wide range of economic policy issues. The OECD publishes its own set of leading economic indicators on developed and developing countries. Notably, we've never observed deterioration to the extent that we presently observe, except when the U.S. was in or entering a recession.


" Present conditions cluster with other historical instances that have often accompanied abrupt 10-20% market plunges - not so consistently that we can use that outcome as a forecast for this particular instance, but often enough to define the present return/risk environment as unusually hostile.

That said, we continue to recognize a slight seasonal bias to the last 10 days of the year in post-war data.

Link -
http://hussmanfunds.com/wmc/wmc111219.htm
================================
So, good luck to all, a merry Christmas & watch the Debt!

perceptions_now wrote on Dec 21^st, 2011 at 8:01pm:


Couldn't you just link the For the Record Thread with this carbon copy PN?

James Kostohryz Positions For 2012: 100% Cash The Only Way To Play This Market

James Kostohryz is a proprietary investor and trader. He also serves institutions as a portfolio consultant specializing in global investment strategy. James was formerly Global Strategist and Head of Global Equity Proprietary Trading for a major financial institution.

Seeking Alpha (SA): How would you generally describe your investing style/philosophy?

James Kostohryz (JK): My investment philosophy is highly unconventional within the investment world.

My view is that for the vast majority of ordinary investors, being fully invested (as their default asset allocation) leads to mediocre performance at best – and will most likely lead to bad performance. This is true for two reasons.

First, by definition average investors have no competitive advantage as stock or fund pickers. Thus, mediocre performance is by definition the best most fully invested average investors can ever hope for.

Second, being passively fully invested means that investors will be overexposed to equities during bear markets. It is my view that it is both dangerous and unrealistic to expect average investors to hold on to investment positions during bear market cycles. Most investors are not emotionally equipped to handle conditions in which large losses of perceived wealth are sustained and even greater losses are feared.

Despite all of the warnings by the investment industry to stay fully invested, mass fear during bear market cycles causes most investors to sell at or near the bottom. Subsequently, these same investors only get back into markets when all seems well and market prices are at or near tops. This sort of behavior is almost inevitable for most individuals and it obviously results in sub-par performance.

As a result, I believe that the default position for most investors should be to hold a very high weighting of relatively risk-free investments such as cash and short-term bonds. I believe that a high weighting towards risky assets such as equities should only be made if and when a high level of conviction in an investment thesis has been developed in which favorable macro, micro and technical factors converge. In particular, investors should deploy cash after the equity markets have sustained large losses.

As a practical matter, this means a successful investment strategy for most individuals must place a primary emphasis on avoiding bear markets. This implies being willing to take profits during bull markets and leaving potentially illusory gains “on the table.”

By studiously avoiding bear markets, investors will be more financially and emotionally equipped to purchase stocks when the herd is selling, valuations are cheap and long-term expected returns are optimal.

SA: Which asset classes are you overweight? Which are you underweight? Why?

JK: I am strongly overweight cash. I am underweight or short every other asset class. At present time, economic and financial risks are at historic dimensions. I believe that cash is by far the best investment at this time on a reward/risk basis.

Investors should make a special effort to invest their cash with an emphasis on safety over yield. I repeat, safety over yield is key. 

SA: Do you believe gold is a genuine hedge in uncertain markets?

JK: Over very long periods of time, gold tends to preserve its purchasing power relative to consumer goods. Therefore, over time, the purchasing power of gold measured in consumer goods neither increases nor decreases and tends to mean-revert.

Furthermore, it is not generally understood that the value of gold relative to various investment goods and gross national income per capita doesn't hold up well over time. It is a fact that over long periods of time, holders of gold become poorer than holders of other investment assets.

On a purchasing power parity basis, gold is currently extremely over-valued versus just about any asset that can be named – equities, real estate or a basket of goods and services such as the CPI. Therefore, at current prices gold is not a genuine instrument of wealth preservation on a long-term basis. To the contrary, over long periods of time, investors in gold can expect to become poorer on an absolute basis (measured by purchasing power) and significantly impoverished on a relative basis compared to investors in other asset classes (on a net worth basis).

Having said that, on a 1-5 year time horizon, I believe gold will probably make substantially higher highs as a result of heightened fears of inflation. These fears will be triggered by aggressively expansive central bank policies in response to economic crises around the world.

SA: International equities proved volatile for both developed and developing markets over the past 2 years. Do you see a clear winner going forward?

JK: Within major developed nations, the US is emerging as a clear winner. It has the best demographics, the best productivity profile and the most manageable debt dynamics amongst the major developed nations.

SA: Where are the real growth stories overseas right now?

JK: The idea of emerging markets 'de-coupling' is fundamentally exaggerated. Emerging market economies are highly vulnerable to the business cycle in developed markets – and they will remain so for many years until their growth models become more based on broad-based internal growth dynamics.

SA: How do you recommend investors with a long-term horizon, a reasonable risk tolerance and spare cash to play this market? Can you offer some specific funds or names you are recommending at present time?

JK: I have nothing to recommend here at this moment. My recommendation is cash.

SA: When you say ‘cash’, do you recommend investors unload the bulk of their stock and bond positions at present time?

JK: As you know, financial advice can ultimately only be proffered on an individual basis. Every investor has different considerations that must be taken into account. Having said that, in general, I believe the vast majority of investors would be best served by raising large quantities of cash at the present time.

SA: Are China, India or other major Emerging Markets better positioned to withstand a serious global economic downturn than the US?

JK: I do not recommend exposure to emerging markets stocks or bonds at the present time. Emerging markets are not better positioned to withstand a serious global economic slowdown than the US. Quite the contrary. These economies are highly dependent on global growth and global financial flows – both of which may be greatly disrupted in the event of a European crisis.

SA: What is the ideal asset allocation for someone with a long-term horizon (greater than a decade) and no need to touch their investments? Can investors continue to rely on stocks after the 'lost decade' we just experienced?

JK: If the time horizon is 20 years or more, a well-diversified portfolio of US and international stocks will outperform bonds, cash or gold. However, for at least the next few months, during this period of extraordinary risk, cash is by far the most attractive asset to own.

Link -
http://seekingalpha.com/article/315364-james-kostohryz-positions-for-2012-100-ca...
================================
As usual, there are issues where I agree with the advice given and also points where I would disagree.

I certainly agree that Cash is currently king, but I would suggest the danger time line is considerably longer than a couple of months.

In fact, all of 2012 is looking to be a likely pivotal period!

However, unlike previous Recessions, where equities bounced back (eventually) & substantial gains where enjoyed, I contend that "this time really will be different", as pretty much all of the Global Macro influencing factors are set on negative for at least a couple of decades, and they are -
1) Demographics - Aging (Baby boomers) and a slowing Total Population Growth, ahead of an actual Population Decline, both in specific countries & Globally.
2) Peak Energy - Specificaly Oil now, followed shortly by Coal & Gas.
3) Peak Debt - With Many countries approaching a Debt to GDP ratio of 100%, with some already exceeding it, it takes away the usual Keynesian fixes, but neither will the usual Austrian fixes be able to be used, because in the current circumstances that would only exacberbate the Debt to GDP equilibrium.
4) Climate Change - Whatever one may think of the Human induced causes arguement, it is apparent that Climate Change is underway.
We are entering a period when our capacity to feed ourselves (Globally) will come under great strain, unless the Population falls significantly, which also creates a self re-enforcing adverse feedback loop, in terms of Economic Demand!
5) Innovation - ???

In terms of the US having better Demographics, I suggest that may be found wanting!

In terms of "emerging Economies" decoupling, I agree, it's not going to happen!


PS - My best to Qikvtek, on his holiday & I hope he has plenty of available Cash?

UK faces bleak 2012 and risk of recession's return, warns thinktank

The UK economy faces a bleak 2012 and risks tumbling back into recession as a result of confidence-crushing austerity measures and the crisis in the eurozone, a new report warns.

The Institute for Public Policy Research says the only good news for consumers is that inflation will fall and so the squeeze on households' spending power will end – "at least for those who keep their jobs".

The thinktank's chief economist, Tony Dolphin, says during 2011 growth was lower than expected, unemployment higher and public sector borrowing greater. Looking ahead, he sees no obvious way to shore up the economy.

"In the short term, economic policy has become a matter of hoping that something turns up

– and that is why, for the UK economy, 2012 is unlikely to be a happy new year.

"As we enter 2012, it seems the word that best describes the outlook for the UK economy is 'bleak'. The eurozone crisis is unresolved and country after country is being forced to adopt extreme austerity measures that will result in large falls in output." He highlights the assessments of the Organisation for Economic Co-operation and Development and the UK's Office for Budget Responsibility (OBR) that "the UK economy is teetering on the brink of a return to recession".

"These forecasts all come with the warning that things could get a lot worse in the eurozone, and if they do then the UK would fall into a serious recession," adds Dolphin.

The OECD has warned that Britain will go back into recession this winter because of a fresh increase in unemployment, a squeeze on family budgets, government spending cuts and the eurozone crisis.

The thinktank, which advises more than 30 developed countries, rejects George Osborne's argument that an expanding private sector could soak up public sector job losses and warns that dole queues will lengthen to more than 9% of the working population as growth slows.

The OBR, whose forecasts are used by the Treasury, has a similarly bleak labour market outlook. It sees unemployment rising from 8.3% now to 8.7% in 2012. At the time of the government's autumn statement on the economy, the independent body slashed its growth outlook as well. It now expects growth of just 0.9% this year and an even weaker 0.7% next year, compared with a previous forecast of 2.5%.

It puts the chances of recession in the near term at one in three, while other economists put the likelihood much higher and reckon growth has already ground to a halt or may even have slipped into negative territory.

The IPPR wants the coalition government to temper its austerity drive, which includes hundreds of thousands of public sector job cuts, to take more account of growth. "When growth is strong, tightening can be speeded up, but when growth is weak, as now, then tightening should be slowed down," the thinktank argues.

It also wants specific measures to boost the economy such as bringing forward the creation of a national investment bank.

Dolphin says even talk of austerity could send the UK into a double dip. "Going into 2012, the risk is that talk of austerity at home and crisis in Europe will dampen spirits to such an extent that the economy drifts into recession," he says.

"If the economy does find itself back in recession, it is likely to have to find its own way out of it. There are ultimately only three solutions: the government decides to increase public spending, or overseas demand for UK output increases substantially, or UK households and companies are given some reason to spend more.

"The first is not going to happen, the second is extremely unlikely, and so we left with the third. But with no prospect of tax cuts or lower interest rates, it is not clear what in the short term the catalyst for more spending by the private sector will be."

The IPPR echoes the predictions of Bank of England policymakers that inflation will fall over the coming year, easing pressure on households grappling with soaring prices and minimal wage rises.

Inflation currently stands at 4.8%, more than double the average annual pay growth of 2%. The Bank's monetary policy committee argues, however, that as this year's VAT rise drops out of calculations and commodity prices ease, inflation will come back down towards the government-set 2% target.

Link -
http://www.guardian.co.uk/business/2011/dec/27/uk-economy-faces-bleak-2012?newsf...
==================================
As I have said previously, there is no  way that Aus-terity is going to solve our current Global dilemma's, so the usual Austrian Economic fixes are not available!

However, far too many countries, particularly the large Western Economies, are already too much into Debt and therefore the usual Keynesian fixes are also not available!

Given the following are the current Major Economic influencing factors and that they will remain so, for quite some time, it would seem we have "catch 22 problems", on a once in history scale!

1) Demographics - Aging (Baby boomers) and a slowing Total Population Growth, ahead of an actual Population Decline, both in specific countries & Globally.
2) Peak Energy - Specifically Oil now, followed shortly by Coal & Gas.
3) Peak Debt - With Many countries approaching a Debt to GDP ratio of 100%, with some already exceeding it, it takes away the usual Keynesian fixes, but neither will the usual Austrian fixes be able to be used, because in the current circumstances that would only exacerbate the Debt to GDP equilibrium.
4) Climate Change - Whatever one may think of the Human induced causes argument, it is apparent that Climate Change is underway.
We are entering a period when our capacity to feed ourselves (Globally) will come under great strain, unless the Population falls significantly, which also creates a self re-enforcing adverse feedback loop, in terms of Economic Demand! 
5) Innovation - ???

Case-Shiller: Home Price Declines Accelerate

Standard & Poor’s reported (.pdf) that the Case-Shiller 20-City Home Price Index fell 1.2% from September to October, its sharpest decline in a year, while the 10-city index fell 1.1%. Seasonally adjusted data was slightly better, the two indexes falling 0.6% and 0.5%, respectively.


On a year-over-year basis, the 20-city index is now down 3.4% and the 10-city index has fallen 3.0%, however, due to price increases earlier in the year, these are both an improvement from the annual rate of decline reported last month.

Nineteen of the 20 cities saw price declines in October with drops of 1% or more in 11 cities paced by a plunge of 5% in Atlanta and 3.3% in Detroit. Even home values in Washington, D.C., fell, down 0.3% for the month, but this area continues to lead all others since the housing bubble burst with an annual gain now at 1.3%.

Link -
http://seekingalpha.com/article/316135-case-shiller-home-price-declines-accelera...
=================================

As usual, winners & losers.

However, of the winners, the US DOW stands out! Whilst making out a small gain, it has done so at great cost (Debt), as a build up to a Political election year.
All Politicians should hang their heads in shame, for putting their own , ahead of the whole country & indeed the whole world!

http://chart.finance.yahoo.com/z?s=%5eDJI&t=1y&q=l&l=on&z=l&a=v&p=s&lang=en-AU&r...