Financial Crisis - 2013 - ????

[Ryan Ruck]

America The Fallen: 24 Signs That Our Once Proud Cities Are Turning Into Poverty-Stricken Hellholes

April 24, 2013

Submitted by Michael Snyder of The Economic Collapse blog,

What is happening to you America? Once upon a time, the United States was a place where free enterprise thrived and the greatest cities that the world had ever seen sprouted up from coast to coast. Good jobs were plentiful and a manufacturing boom helped fuel the rise of the largest and most vibrant middle class in the history of the planet. Cities such as Detroit, Chicago, Milwaukee, Cleveland, Philadelphia and Baltimore were all teeming with economic activity and the rest of the globe looked on our economic miracle with a mixture of wonder and envy. But now look at us. Our once proud cities are being transformed into poverty-stricken hellholes.

Did you know that the city of Detroit once actually had the highest per-capita income in the United States? Looking at Detroit today, it is hard to imagine that it was once one of the most prosperous cities in the world. In fact, as you will read about later in this article, tourists now travel to Detroit from all over the globe just to see the ruins of Detroit. Sadly, the exact same thing that is happening to Detroit is happening to cities all over America. Detroit is just ahead of the curve.

We are in the midst of a long-term economic collapse that is eating away at us like cancer, and things are going to get a lot worse than this. So if you still live in a prosperous area of the country, don't laugh at what is happening to others. What is happening to them will be coming to your area soon enough.

The following are 24 signs that our once proud cities are turning into poverty-stricken hellholes...

#1 According to the New York Times, there are now approximately 70,000 abandoned buildings in Detroit.

#2 At this point, approximately one-third of Detroit's 140 square miles is either vacant or derelict.

#3 Back during the housing bubble, an acre of land in downtown Phoenix, Arizona sold for about $90 a square foot. Today, an acre in downtown Phoenix sells for about $9 a square foot.

#4 The city of Chicago is so strapped for cash that it is planning to close 54 public schools. It is being estimated that Chicago schools will run a budget deficit of about a billion dollars in 2013.

#5 The city of Baltimore is already facing unfunded liabilities of more than 3.2 billion dollars, but the city government continues to pile up more debt as if it was going out of style.

#6 Today, the murder rate in East St. Louis is 17 times higher than the national average.

#7 According to USA Today, the "share of jobs located in or near a downtown declined in 91 of the nation's 100 largest metropolitan areas" between 2000 and 2010.

#8 Between December 2000 and December 2010, 48 percent of the manufacturing jobs in the state of Michigan were lost.

#9 There are more than 85,000 streetlights in Detroit, but thieves have stripped so much copper wiring out of the lights that more than half of them are not working.

#10 The unemployment rate in El Centro, California is 24.2 percent, and the unemployment rate in Yuma, Arizona is an astounding 25.6 percent.

#11 It has been estimated that there are more than 1,000 homeless people living in the massive network of flood tunnels under the city of Las Vegas.

#12 Violent crime in the city of Oakland increased by 23 percent during 2012.

#13 If you can believe it, more than 11,000 homes, cars and businesses were burglarized in Oakland during 2012. That breaks down to approximately 33 burglaries a day.

#14 As I have written about previously, there are only about 200 police officers assigned to Chicago's Gang Enforcement Unit to handle the estimated 100,000 gang members living in the city.

#15 The number of murders in Chicago last year was roughly equivalent to the number of murders in the entire country of Japan during 2012.

#16 The murder rate in Flint, Michigan is higher than the murder rate in Baghdad.

#17 If New Orleans was considered to be a separate nation, it would have the 2nd highest murder rate on the entire planet.

#18 According to the Justice Department’s National Drug Intelligence Center, Mexican drug cartels were actively operating in 50 different U.S. cities in 2006. By 2010, that number had skyrocketed to 1,286.

#19 Back in 2007, the number of New York City residents on food stamps was about 1 million. It is now being projected that the number of New York City residents on food stamps will pass the 2 million mark this summer.

#20 The number of homeless people sleeping in the homeless shelters of New York City has increased by a whopping 19 percent over the past year.

#21 As I noted yesterday, approximately one out of every three children in the United States currently lives in a home without a father.

#22 In Miami, 45 percent of the children are living in poverty.

#23 In Cleveland, more than 50 percent of the children are living in poverty.

#24 According to a recently released report, 60 percent of all children in the city of Detroit are living in poverty.

As I mentioned at the top of this article, the decline of the city of Detroit has become so famous that it has actually become a tourist attraction. The following is a short excerpt from an article in the New York Times...

But in Detroit, the tours go on, in an unofficial capacity. One afternoon at the ruins of the 3.5-million-square-foot Packard Plant, I ran into a family from Paris. The daughter said she read about the building in Lonely Planet; her father had a camcorder hanging around his neck. Another time, while conducting my own tour for a guest, a group of German college students drove up. When queried as to the appeal of Detroit, one of them gleefully exclaimed, “I came to see the end of the world!”

For much more on the shocking decline of one of America's greatest cities, please see my previous article entitled "Bankrupt, Decaying And Nearly Dead: 24 Facts About The City Of Detroit That Will Shock You".

So are there any areas of the country that are still thriving?

Well, yes, there are a few. In particular, those areas that are sitting on top of energy resources tend to be doing quite well for now.

One example is Texas. In recent years people have been absolutely flocking to the state. There are lots of energy jobs, the cost of living is low and there is no state income tax.

But overall, things are really tough out there. Over the past decade America has lost millions of good jobs to offshoring, advancements in technology and a declining economy.

Last year, the United States had a trade deficit with the rest of the world of more than half a trillion dollars. Overall, the U.S. has run a trade deficit with the rest of the world of more than 8 trillion dollars since 1975.

All of that money could have gone to U.S. businesses and U.S. workers. In turn, taxes would have been paid on all of that income which could have helped keep our cities great.

But instead, our politicians have stood idly by as we have lost tens of thousands of businesses and millions of jobs. If you can believe it, more than 56,000 manufacturing facilities have closed down permanently in the United States since 2001.

We have allowed our economic infrastructure to be absolutely gutted, and so we should not be surprised that our once proud cities are turning into poverty-stricken hellholes.

And this is just the beginning. The next wave of the economic collapse is rapidly approaching, and when it strikes unemployment in this country will eventually rise to a level that is more than double what it is now.

When that happens, I wouldn't want to be anywhere near our rotting, decaying cities.

[American Patriot]

All part of the plan.....

[vector7]

As Phil mentioned in another thread...

Obama Budget Shows Middle-Class Tax Pledge Was Fraud

Posted 04/23/2013 06:35 PM ET

Taxes: A new study shows President Obama's budget would significantly boost taxes on the middle class. Funny, we seem to recall him promising voters that only the rich would pay for his grandiose spending plans.

According to the analysis from the nonpartisan but liberal-leaning Tax Policy Center, Obama's budget would hit wealthy families hardest, with the top 20% of income earners shouldering almost 90% of the tax hike.

But families at every income level would end up paying more if Obama's budget were enacted, including those making less than $10,000 a year.

Among other things, the TPC explains, Obama wants to nearly double the federal cigarette tax, raising it to $1.95 a pack and indexing it for inflation, to pay for his universal preschool plan. That hike would be paid for almost entirely by lower-income families.

In addition, Obama wants to change the government's inflation gauge to what's called a "chained CPI," which would in effect lower the official inflation number.

Since tax brackets are indexed to the CPI, this would push middle-class families into higher tax brackets more quickly. The Tax Policy Center's Joseph Rosenberg called it a "backdoor" tax hike of $100 billion.

Then there's Obama's proposal to limit the tax break from deductions to 28%, which would raise taxes on families with incomes down to $183,250 — well below Obama's no-new-tax threshold of $250,000.

This will be a shock to those who thought Obama was being honest when he promised during his re-election campaign that he could spend more money and cut the deficit simply by asking the "wealthiest families to pay a little more" and closing some corporate loopholes.

The fact is, Obama long ago violated his no-new-middle-class-tax pledge, not that anyone noticed, since the press gave him a free pass.

Almost as soon as he took office, Obama signed a law that nearly tripled the federal cigarette taxes — a $33 billion tax hike paid mainly by lower-income families.

And the $1 trillion in new ObamaCare taxes he signed into law in early 2010 included several provisions that will raise middle-class taxes — including new limits on flexible spending accounts, a higher threshold for deducting medical expenses, and the mandate tax.

Plus, as IBD recently reported, other ObamaCare taxes will eventually target the middle class because they aren't properly indexed.

The income thresholds for the Medicare tax surcharge, for example, aren't indexed for inflation, which means that in a few years it will start sweeping up middle-income families.

That law also includes a huge new fee on insurance companies that will raise $102 billion over the next decade, with the costs passed down to middle-class families in the form of higher premiums.


Read More:
http://news.investors.com/ibd-editor...ddle-class.htm

[American Patriot]

• Updated May 9, 2013, 2:54 p.m. ET

Dollar Jumps Above ¥100


By TAKASHI MOCHIZUKI and NICOLE HONG

The dollar rose above the key threshold of 100 yen Thursday for the first time in four years, capping a 15% surge this year, after better-than-expected U.S. economic data sparked a broad rally in the greenback.


The dollar finally breached the 100 yen barrier after flirting with the level since Japan's central bank on April 4 unveiled an aggressive plan to add money to its economy in a bid to jump-start growth.



Breaking the 100 yen threshold triggered big gains for the greenback against a broad range of currencies.


Traders said the release of better-than-expected U.S. jobless claims data earlier in the day had given dollar bulls the catalyst they needed to push the currency through the psychologically important level against the yen, which it had flirted with for more than a month.


The dollar didn't stop its charge once it hit 100 yen, quickly surging as high as 100.69 yen. The sharp move set off a scramble to buy the dollar against currencies including the Australian dollar, which fell to its lowest since July 2012.


The dollar had traded within a few yen of 100 since April 4, when Japan's central bank unveiled an aggressive plan to add money to its economy in a bid to jump-start growth. It was the first time a dollar bought more than 100 yen since April 14, 2009.


"It was like, whoa! It was just this flurry of activity, and it all went very quickly," said Carl Forcheski, director of corporate foreign-exchange sales at Societe Generale GLE.FR -0.13% in New York. "This is the manifest destiny of dollar-yen. It's what people were expecting for a long time, and they decided to chase it today."


Within days of the Bank of Japan's April 4 announcement, the dollar leaped 7% against the yen. Traders reasoned that the measures would sharply increase the supply of yen; the market also expected Japanese investors to sell yen in a move to boost holdings overseas in search of better returns. That shift has yet to materialize, although big insurers are expected to unveil plans to move some money to overseas bonds.


The dollar's fast rise has prompted many brokerage houses to raise their forecasts for the dollar and the view is increasing that the greenback may reach 110 yen, or even higher, by the end of this year.


"What's the next stop? I heard someone say 120 yen, and that looks feasible to me over the next few months," said George Dowd, who heads Newedge USA's foreign-exchange trading desk in Chicago.
The yen's fall has also been a critical factor in helping to push Japan's stock market sharply higher in a rally that has pushed the Nikkei Stock Average to its highest levels since July 2008.


The break above the critical level is the latest milestone in a turnaround in sentiment from last November when Japanese Prime Minister Shinzo Abe, then running for the office, said he wanted to see a massive quantitative easing by the BOJ to help end Japan's long-running deflationary pressures.


New Bank of Japan Gov. Haruhiko Kuroda responded in April with a program that involved "all the policy measures imaginable at this point." At the core is a plan to purchase Japanese government bonds and other assets at a much faster pace with a never-before-seen doubling of the monetary base over the next two years. The monetary base is the core figure for the money supply. An increase in the money stock will tend to push the value of the currency lower.


"It is the first time I can remember Japanese policy makers truly and positively surprising markets for a long time, perhaps even ever in my 32 years of work," said Jim O'Neill, chairman of Goldman Sachs GS -1.12% Asset Management.


Enlarge Image





Reuters The yen has been sliding against the dollar since November, when then-candidate Shinzo Abe declared that as prime minister he'd push the Bank of Japan to be more aggressive.





While officials say the move is aimed at pulling the economy out of the deflation that has hampered growth since the mid-1990s, they are also glad to see it push down the stubbornly strong yen.


With the global economy hit by recession and Europe in the throes of its euro-zone crisis, the yen had been on what appeared to be an inexorable rise as a safe haven.


Before signs of trouble in the financial sector emerged in 2007, the dollar had been above ¥120. As the euro-zone crisis added to global concerns, the dollar reached a post-World War II low of ¥75.31 on Oct. 31, 2011.


Repeated currency interventions by Japan had managed to slow the rise but not reverse the overall direction. Between September 2010 and October 2011, Japan intervened four times.


The stronger currency has undercut Japan's big industrial exporters in their attempts to sell against their Korean and German rivals. In response they continued to shift manufacturing overseas, worsening a "hollowing out" that has plagued the domestic economy over the past 20 years. That in turn has kept wages under pressure, further adding to deflationary pressures.


Group of 20 finance ministers said in late April that they agreed that Japan's massive monetary easing was needed to boost growth, a sign that they weren't stepping up pressure on Tokyo over the yen's recent drop.


Traders were cautious that the G-20 could have criticized Japan's actions, slowing the yen's fall. Such caution was heightened April 12 after the U.S. Treasury said in a report on currency movements that it would continue to press Japan to "to refrain from competitive devaluation and targeting its exchange rate for competitive purposes."


While the yen's fall is expected to help exporters, there are also considerable downsides for Japan, notably in terms of sharply higher energy import costs.


Trade figures for February showed that energy import costs were running 12% higher than a year ago, despite a decline in import volumes. That is due in large part to the need for fossil-fuel imports to provide electricity, since all but two of the nation's nuclear-power plants remain closed after the Fukushima Daiichi nuclear-plant accident in March 2011.

[American Patriot]

May 16, 2013, 8:47 a.m. EDT
U.S. jobless claims jump to six-week high

Sharp drop over past month erased, but no ‘sequester’ effects seen

By Jeffry Bartash, MarketWatch


WASHINGTON (MarketWatch) — The number of people who applied last week for new unemployment benefits surged to the highest level in a month and a half, indicating the U.S. labor market is still not healing fast enough to rapidly bring down the nation’s jobless rate.

Reuters Enlarge Image

Sarah Azad, a senior majoring in telecommunications at New York City College of Technology, waits to meet with potential employers at the 2012 Big Apple Job and Internship Fair at the Javits Center in New York in this April 27, 2012 file photo.

Initial jobless claims climbed by 32,000 to a seasonally adjusted 360,000 in the week ended May 11, the Labor Department said Thursday. Economists surveyed by MarketWatch had expected claims to rise to 330,000 from a revised 328,000 in the prior week.
U.S. stock futures ESM3 -0.08% weakened after the report, as well as separate data showing housing starts fell sharply and consumer prices weakened in April.Read Indications.



A Labor official said there was nothing unusual in the report and there was no evidence that reductions in federal spending under a law known as the sequester contributed to the spike.


The level of weekly claims has been particularly volatile over the past two months, ranging from a high of 388,000 to a low of 327,000. That’s why economists pay closer attention to the more stable four-week average, which rose a by a much smaller 1,250 to 339,250 and remained near a five-year low.


In other words, the labor market is not getting much better but it’s not getting any worse. Claims are viewed as a good barometer of how many layoffs are occurring in the economy. Yet the link between claims and new hiring is far less precise. Although companies are eliminating fewer jobs, they are not hiring as many people as they were at the start of the year.


ECONOMY AND POLITICS | @MKTWEconomics
Manufacturing indicators show weakness
Empire State index is negative, and industrial production drops.

Home-builder confidence rises
After declining for three months, a gauge of confidence among home builders rose in May.

Acting IRS chief first to go as Obama vows change
President Obama announced the resignation of the head of the IRS, the first head to roll in a growing scandal over the inappropriate treatment doled out to conservative groups.



Job creation would have to take place at a much faster pace to pull the nation’s 7.5% unemployment rate down to pre-recession levels of below 6%, but companies are unwilling to pad their payrolls until they’re convinced that demand is ready to climb to a higher long-term plateau.


The number of people already receiving benefits, known as continuing claims, fell by 4,000 to a seasonally adjusted 3.0 million in the week ended May 4. Most states typically offer 26 weeks of unemployment pay.


Initial claims from two weeks ago, meanwhile, were revised up to 328,000 from an original reading of 323,000, based on more complete data collected at the state level.

Jeffry Bartash is a reporter for MarketWatch in Washington.

[American Patriot]

on the brighter side (for me anyway) homes are booming:

Kansas City area home construction activity remains strong this spring

May 16

By STEVE ROSEN

The Kansas City Star

Home-building activity in the Kansas City area surged again in April, the busiest month in the past five years.

Data released by the Home Builders Association of Greater Kansas City showed 444 permits were issued last month for single-family units. That marked the first time monthly permits had climbed above 400 since April 2008 when 441 permits were issued.


Through the first four months of this year, the association said 1,276 single-family permits had been issued in the eight-county area, up from 917 in 2012. This was also the best four-month stretch since 2008.


“Builders say the local new home market is hot and they recognize that the supply of unsold homes is probably too small for the demand experienced this spring,” Sara Corless, the association’s executive vice president.


Johnson County experienced a 57 percent increase in home construction activity in April from the previous year, and Wyandotte County was up 192 percent, the association said. On the Missouri side, home-building activity in Jackson County rose 26 percent from April 2012, with Cass County reporting a 23 percent increase.


Construction activity for multi-family units also climbed in the January-April period, with 1,281 permits issued.

Read more here: http://www.kansascity.com/2013/05/16...#storylink=cpy

[Ryan Ruck]

More food "downsizing"/cost increases...

I'm making some boneless pork ribs before I head to work for dinner later tonight (pulled them out of the freezer 2 days ago and they've been sitting in the fridge since because I've been getting home too late to cook 'em) and had some observations.

1) The ribs I pulled out of the deep freezer had a sell by date of 05/xx/2011. Price per pound was $1.98. Ribs with some 2012 sell by dates are $2.08 per pound.

2) I usually use Sweet Baby Ray barbecue sauce on my ribs. I get the gallon sized jugs Walmart sells (I like my SBR! ). The sauce coming out of this jug I bought about two months ago and just opened is roughly 20%-25% runnier than the jug I just finished off. Thinning out the sauce with water and selling it at the same price.

[Phil Fiord]

Ryan, there has been a slew of changes to products. Most changes come in the form of keeping a price roughly the same, but making the content weight less. One early adopter was Kraft Marshmallows.

What I find troublesome is some things that were common and accepted for weight and volume are being downsized, so that a recipe that may have called for 1 box of product X will no longer serve as the full amount of a needed ingredient.

[Phil Fiord]

I have copied the following over as it simply sums it best without my adding to the rehash.

http://www.city-data.com/forum/15811796-post11.html

elnina Location: San Antonio/Houston 15,772 posts, read 11,450,659 times Reputation: 32451

Raising prices when strapped consumers are price-sensitive can be a formula for disaster. That's why there's often less in the box instead. The package size seems the same, but when you open it, you see a lots of "air" in it. Or the package shrinks a bit, but consumer is unable to notice it, because there is nothing of old size to compare. And so cereal shrink from 24 oz to 18 oz, Frito-Lay from 12 oz to 10, Hellman's mayo was 32 oz now is only 30, ice cream from 1.75 quarts to 1.5 quarts. Even Bounty towels got cut from 60 to 52. Marketing guru's say that consumers are far more sensitive to higher prices than to less product. People are generally unaware they're getting less, most of those who are aware say they'd rather get less than pay more. Another practice is to make product size reductions, but also to slightly lower prices. Most consumers like smaller-portioned packages that cost less, even when they're paying more per ounce. Yeah.... one day I will open a carton of eggs and see only 11.

[American Patriot]

Look at beer.

12.7 oz?

not 13.whatever

Potato chips (I don't eat that stuff normally) but you used to buy a bag of nearly a pound of chips (back when I was a kid). Those bags are the same size but there's something like 4 oz in them these days.

[American Patriot]

Updated May 23, 2013, 11:56 a.m. ET

New-Home Sales Rise 2.3%, With Prices at Record High


By SARAH PORTLOCK

WASHINGTON—Developers sold more new homes in April and attracted record-high prices, the latest signs of a stronger housing market as the spring selling season gets under way.

Sales of new homes rose by 2.3% in April to a seasonally adjusted annual rate of 454,000, the second highest pace since July 2008, the Commerce Department said. The figure beat expectations.

The housing market is turning out to be a key economic driver this year as home prices rise, more homes are sold and builders break ground on more projects. The sales pace of previously owned homes reached its highest level since November 2009, rising to 4.97 million, the National Association of Realtors said Wednesday.

In a welcome sign for builders, the median price for a new home sold in April was $271,600, up 14.9% from a year ago and the highest price on records dating back to January 1963, the Commerce Department said Thursday. In a separate report, the Federal Housing Finance Agency's monthly home-price index showed home prices rose 1.3% in March.

The price gains reflect an increase in home sales of properties priced above $400,000 and a declining rate of homes sold that are priced below $300,000, the report showed.

"Lean inventory levels and lessening competition from distressed properties continue to be a positive development to new home prices," said Sam Bullard, senior economist with Wells Fargo Securities.

April saw 156,000 new homes listed for sale, adjusted for seasonal factors, the largest since October 2011. That supply would take 4.1 months to deplete at the current sales pace. A six-month pace is considered a balanced market.

"Builders are intentionally taking it slow, allowing inventories to remain tight as a way to recapture pricing power that had been lost in the bust," said Stephen Stanley with Pierpont Securities.

Home builders are feeling better about the market. Confidence rose in May, with sales expectations reaching a five-year peak, according to a survey by the National Association of Home Builders.

Rising home prices help the market. As home prices advance, the number of people who owe more on their mortgages than their homes are worth declines, which encourages many to sell their homes and buy new properties.

Still, the current rate of home-price gains could be difficult to sustain in the long term and scare away some buyers.

"The steady climb to record highs in median home prices is concerning, however, as too rapid a rise in home prices could leave some willing buyers out of the market," said Gennadiy Goldberg, a strategist with TD Securities.

Federal Reserve Chairman Ben Bernanke told Congress on Wednesday that "the housing market has strengthened over the past year, supported by low mortgage rates and improved sentiment on the part of potential buyers."

Thursday's data showed new-home sales in April were mixed in the four areas of the country, dropping by nearly 17% in the Northeast and falling moderately in the Midwest. Sales rose in the South and West.

Home sales remain well below historical levels. New-home sales peaked in July 2005, when they hit an annualized pace of nearly 1.4 million, and declined to a low of 273,000 in February 2011. Builders point to tightened credit conditions, lack of land available and rising costs of building materials as some discouraging signs of the current market.

The reports that show quick improvement haven't always been reflected in other parts of the economy.

The Labor Department said Thursday the number of U.S. workers seeking new unemployment benefits fell last week, suggesting slow improvement in the labor market. Initial jobless claims, a proxy for layoffs, decreased by 23,000 to a seasonally adjusted 340,000 in the week ended May 18.

[Ryan Ruck]

Japan's markets took a 7.32% drop yesterday.

[American Patriot]

What happened? Another Fukashima?


I saw the Nikkei splattered this morning. I wish I knew more about the markets

[American Patriot]

Yikes! The Japanese stock market cratered overnight

By Neil Irwin, Published: May 23, 2013 at 9:42 amE-mail the writer

Well that was fast.


Japanese financial markets have experienced a stunning rise over the past six months, as a new government led by Prime Minister Shinzo Abe introduced policies of aggressive Keynesian stimulus paired with equally aggressive monetary easing by the Bank of Japan. The surest, steadiest bet on global financial markets in that time has been on rising Japanese stocks and a falling yen that makes Japanese exporters more competitive.


Until Wednesday night, that is. The Japanese market tanked in epic fashion in Thursday’s trading session, with the Nikkei index falling 7.3 percent. The yen appreciated 1.7 percent against the dollar. Here’s the one-month stock chart of the Nikkei:


Source: Bloomberg




Ouch.


Here’s the thing, though. There wasn’t really any news overnight that would justify a swing of that magnitude. Analysts are blaming the drop on some weak Chinese economic data and hints from Fed Chairman Ben Bernanke on Wednesday that someday, eventually, the Fed will taper its own monetary easing. There is no way on earth, though, that those kinds of tidbits would justify the kind of moves that were evident in the Japanese market.


So it has all the markings of being driven by some weird mix of psychology and the details of the inner workings of markets, of a lot of bullish investors either choosing or being forced to unwind bullish bets at the same time. It also is a reflection of the risks that arise when markets are so overwhelmingly driven by policy, in this case monetary easing from both the Bank of Japan and Federal Reserve. As wild swings in the U.S. markets Wednesday in response to Bernanke’s testimony show, any little blip from central banks can cause outsized moves in the markets.


That said, it’s worth keeping the 7 percent drop in Japanese stocks Thursday in perspective. Over the longer horizon (this chart shows the last six months), “Abenomics” is still looking pretty great for Japanese companies and investors:
Source: Bloomberg

Still, Thursday’s drop suggested the rally may be a bit more fragile than it had appeared.

[American Patriot]

US Stocks dipped too:



MARKET SNAPSHOT: U.S. Stocks Drop, Hit By Fed, Asian Selloff

By Victor Reklaitis and Polya Lesova, MarketWatch

Published May 23, 2013

Dow Jones Newswires

NEW YORK – U.S. stocks dropped in Thursday morning trade after Japanese equities dived overnight, as global markets reacted to weak Chinese manufacturing data and worries about the Federal Reserve's potential tapering of its bond-buying program.

The Dow Jones Industrial Average (DJI) was down 65 points, or 0.4%, to 15,242, while the Standard & Poor's 500 Index (SPX) fell 10 points, or 6%, to 1,645. The Nasdaq Composite (RIXF) lost 16 points, or 0.5%, to 3,447.

But the main indexes have lifted off their session lows, trimming their loss, following encouraging new-home-sales data.

The Dow had been down 0.8% earlier Thursday.

Japanese stocks led an Asian selloff Thursday, with the Nikkei Stock Average closing down 7.3%, its worst single-day loss since March 2011.

The Japanese retreat came as 10-year Japanese government bond yields surged to their highest level in more than a year, forcing the Bank of Japan to offer 2 trillion yen ($19 billion) in funds to try to placate markets. An unexpected contraction in Chinese manufacturing also weighed.

On Wednesday, minutes from the latest Federal Reserve policy meeting and testimony from Fed Chairman Ben Bernanke suggested that the central bank's bond-buying program could be pared back in coming months.

"Yes, stocks really can go down," said Brian Belski, chief investment strategist at BMO Capital Markets. Before staging a negative reversal Wednesday, the S&P 500 had risen to an intraday record of 1,687.18 representing an 18% gain in 2013 to date.

But Belski added that he views the current action as just a pullback.

"Do we believe the bull market is over? Categorically no," he said. "This is a calm. This is a respite. This is not 2008."

At 10 a.m. Eastern, fresh figures for new-home sales came out and beat expectations. Sales of new U.S. homes edged up in April to the second-highest post-recession level, reaching a seasonally adjusted annual rate of 454,000. Economists polled by MarketWatch expected 430,000.

Before Thursday's open, data showed that U.S. weekly jobless claims dropped by 23,000 to 340,000 in the week ended May 18, keeping the level of initial claims in a range consistent with modest job growth.

In addition, the Federal Housing Finance Agency released its home-price report for March before the open, saying U.S. home prices rose a seasonally adjusted 1.3% in March. Markit also said its flash manufacturing purchasing managers index for May fell to 51.9. That's the lowest reading since October, but Markit's overall report was mixed.

St. Louis Fed President James Bullard spoke Thursday in London on monetary policy, but his comments were identical to a speech he gave earlier in the week, in which he said the bond-buying program should continue.

Wall Street had a wild ride Wednesday on Fed tapering fears, with the S&P 500 losing 13.81 points, or 0.8%, to 1,655.35.

On the earnings front, shares of Hewlett-Packard Co. (HPQ) jumped 14% in morning trade after the computer maker reported second-quarter results and an outlook above expectations.

European stocks also fell sharply Thursday, with the Stoxx Europe 600 index down 2%.

Weak China data weighed on oil prices, while gold (GCM3) rose about $13 to $1,380 an ounce.

Read more: http://www.foxbusiness.com/news/2013...#ixzz2U8SqAnoU

[American Patriot]

Wall Street Recovers After Worldwide Slump





By NATHANIEL POPPER and BETTINA WASSENER

Published: May 23, 2013

After market declines around the world, Wall Street recovered from initial losses on Thursday after global investors were rattled by signs of a slowdown in Chinese manufacturing and a potential easing of central bank support for the economy.



Enlarge This Image

Agence France-Presse — Getty Images

A closely watched index showed a contraction in the manufacturing sector in China in May. Above, a clothing factory in Huaibei, China.




The worst drop was in Tokyo, where the Nikkei index fell 7.3 percent, the most since the 2011 tsunami there. In New York, the benchmark Standard & Poor’s 500-stock index was down 0.9 percent in morning trading, but regained ground by early afternoon. Leading indexes closed down 2.1 percent in Germany and France.


The pessimism that overtook global investors on Thursday was a sharp reversal from months of steady advances in share prices around the world. Many investors had voiced concern that the rally was due for a break, but it had not been clear what would serve as a catalyst for a downturn.


The dip began on Wednesday afternoon, after the Federal Reserve chairman, Ben S. Bernanke, testified before Congress that the Fed could pull back on its monetary stimulus programs if the economy continued to show progress. Later on, an index of Chinese manufacturing showed that activity actually slowed in May for the first time in months.


The Chinese purchasing managers index, released by HSBC, fell to 49.6 points in May from 50.4 a month earlier. A reading below 50 signals a contraction.


China’s slowing momentum has been long in the making and has been, to some extent, deliberately engineered by the authorities in Beijing, who are trying to bring about a more balanced pace of growth. Still, disappointments over the performance of China’s economy – the second-largest in the world after that of the United States – remain liable to unsettle markets around the globe.


The response was particularly stark in Japan, where the government is in the early stages of an aggressive effort to prop up the long-suffering economy. High hopes that the bold economic policies of Prime Minister Shinzo Abe will succeed have prompted a huge rally in stocks since November. The Japanese market is still up nearly 40 percent since the start of the year.


Akira Amari, Japan’s economy minister, sought to calm nerves after the market closed on Thursday. “The Japanese economy is staging a sound recovery, and there is no need for panic,” he said, according to the Nikkei business daily. The plunge “is not exceedingly large, and stock prices in China, where the shock originated, have not fallen so much either,” he added.


“The stock market’s rise has so far been largely driven by expectations of an economic turnaround, but we’ve yet to see Mr. Abe’s policies really gain traction,” said Kiyoshi Yoshimoto, chief senior economist at the Japan Research Institute in Tokyo. “That means even small shocks, like lower-than-expected numbers out of China or some volatility in bond markets, can trigger a big but temporary response.”


Analysts have broadly welcomed Mr. Abe’s efforts to breathe life into the Japanese economy through a three-pronged approach of major fiscal spending, a promise to pursue structural reforms and a monetary policy that has effectively flooded the economy with cheap money through purchases of government bonds, commercial debt and other assets.


One result has been a weakening of the yen, whose 17 percent drop against the dollar since the start of this year has helped lift the earnings prospects of many Japanese exporters. Data released in the last few weeks have shown that the economy has begun to pick up speed.


Taking many market observers by surprise, however, bond yields have risen in recent days, fanning worries about a rising interest rate burden for the government. The yield on the 10-year Japanese government bond briefly spiked above 1 percent on Thursday before dropping back to 0.9 percent. The move spooked investors, helping produce the fall in the stock markets, said Stephen Davies, chief executive of Javelin Wealth Management in Singapore.


Japan is vulnerable to rising borrowing costs because of its high public debt, which is twice the size of its economy. Bonds are also the main financial assets held by banks, pension funds and insurance companies, making a surge in debt yields perilous.


Given the indebtedness of the Japanese government, there are worries about the effect that this could have if sustained, Mr. Davies said. “It is too early to say whether it will be sustained, so we should not read too much into one day’s extreme move in the markets.”


The sell-off on Thursday came in spite of economic news from Europe that was, if not good, at least better than many expected. The Markit Economics euro zone purchasing managers’ index for the manufacturing sector rose to 47.8 points from 46.7, while the services index rose to 47.5 from 47. While that points to continuing contraction, the improvement suggests the economy may be getting nearer to its nadir, setting up conditions for a rebound in the second half.


The economic data coming out of the United States on Thursday also looked better than expected. The number of people filing for unemployment benefits last week was 340,000, lower than analysts had expected and lower than the week before.


Signs of a strengthening economy could amplify the talk about the Fed slowing down its bond-buying program. But Fed officials have been emphatic that they will not pull back unless it is clear the economy can handle it. Some strategists said on Thursday that investors were overstating the risk of a Fed drawdown.


James Bullard, president of the Federal Reserve Bank of St. Louis, said in a speech in London on Thursday that the Fed was likely to “continue with the present quantitative easing program.”


David Jolly contributed reporting from Paris and Hiroko Tabuchi from Tokyo.

[Ryan Ruck]

"Do we believe the bull market is over? Categorically no," he said. "This is a calm. This is a respite. This is not 2008."

Not everyone agrees...

'Tectonic Plate Shift' for Markets on Fed Fears

May 23, 2013

Japanese stocks plunged 9 percent from their intra-day highs on Thursday as weak Chinese data added to growing fears that the U.S. Federal Reserve may withdraw its bond buying sooner than expected, with one analyst calling this a seismic shift of tectonic plates for the markets.

"I think yesterday may well be a turning point...the inevitable 5-7 percent correction. I think yesterday marks a very important turning point for the markets. Anybody who was expecting to see even higher stock prices might well be a bit disappointed going forward," Dennis Gartman, the founder and editor of The Gartman Letter told CNBC Thursday.

"Yesterday was a tectonic plate shift between the feet of the market...reversal day in the stock market, reversal day in the bond market, very strange movement in the foreign exchange markets. I think yesterday was an extremely important trading session and many many things shifted and changed."

Nearly all Asian markets sank by over 2 percent in afternoon trading with the Nikkei closing down over 7 percent, its sharpest loss since March 2011. China's Shenzhen Composite Index was relatively untouched despite the market fright occurring after weak economic data from the country. HSBC's latest flash reading of factory activity showed a slip below the boom-and-bust level of 50 for the first time in seven months.

The trading volume on the Tokyo Stock Price Index (TOPIX) hit an all-time record at around 6 a.m. London time with a volume of 6.59 billion shares. The second-largest securities exchange in Japan, the Osaka stock exchange, briefly suspended trading in Nikkei futures at roughly the same time.

Meanwhile, European markets fell sharply lower on the open. The U.K.'s FTSE was lower by 1.6 percent, the German DAX down by 2.02 percent and the French CAC sinking by 1.93 percent.

Fed Chairman Ben Bernanke's testimony on Wednesday gave little new information, but markets were sent on a ride both during and after his speech. Investors were spooked further by the release of the minutes of the Federal Open Markets Committee later in the day.

The minutes from the Fed's April 30-May 1 meeting showed "a number of participants" expressed a willingness to scale back the central bank's $85 billion a month in asset purchases, perhaps as soon as June, if the U.S. economy picks up further.

The Federal Reserve's next meeting is on June 18-19.

"Mr Bernanke confused everybody for the first time yesterday, saying in my mind one thing before the joint economic committee, and another in the minutes," Gartman said.

"Instead of thinking that QE (quantitative easing) would go on till 2014, probably sometime later this Autumn we will probably begin to see the tapering."

U.S. stocks and bonds, which had initially rallied on Bernanke's dovish comments, sold off when Bernanke was questioned about the unwinding of quantitative easing. Bond purchases could start to be pared back in a couple of months, Bernanke answered, which sent markets into a tail spin.

The Dow Jones Industrial Average fell 80.41 points, or 0.52 percent, to close at 1,5307.17. The S&P 500 lost 13.81 points, or 0.8 percent, to finish at 1,655.35. TheNasdaq dropped 38.82 points, or 1.11 percent, to close at 3463.30. Both the Dow and S&P were up as much as 1 percent earlier in the session.

That sparked selling across markets, including gold, which reversed its sharp gains. The 10-year Treasury yield closed above 2 percent for the first time since March.

Kit Juckes, the global head of FX strategy at Societe Generale said the sell-off wasn't about when the Fed begins to taper.

"[Rather] it's about too many positions on the same side of the boat and the danger of a capsize," he said.

"The prospect of low rates for a long time accompanied by even a tepid economic recovery encouraged investors and traders to buy yield and sell volatility. Those positions are very crowded and since the rate outlook is now uncertain (i.e. volatile) and a reduction in accommodation is inevitable, both positions will continue to be unwound over time."

Treasurys may bounce, pushing yields lower, Juckes said. But if they do, he believes, investors should sell U.S. government bonds.

[American Patriot]

So....


We're headed for a crash?

[Ryan Ruck]

I don't pretend to know a lot about the markets and economics but as the other article mentions, I think seismicity is a good comparison. We could end up with a bunch of smaller "quakes"/corrections or "The Big One".

The fact is, the road we're on is simply unsustainable - ever increasing federal bureaucracy, more and more taxes, a weakening military, ballooning debt, an increasingly devalued currency, stagnant/lowering wages, huge numbers of people dropping out of the workforce, increasing costs of goods and services, more expensive energy, and a rapidly growing chasm between statists and free men.

What will happen when we finally get to the end of that road, I have no idea but I don't think it will be good.

[American Patriot]

Just gotta sell the house man. lol