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Economic Outlook

Car Sales Have A Long Way To Fall

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Posted by John Rubino - DollarCollapse.com

on Wednesday, 05 July 2017 05:26

The past decade’s historically low interest rates convinced millions of Americans to buy cars they could only afford with hyper-cheap credit. This made auto sales one of the drivers of the recovery, but it also left far too many people with underwater “car mortgages” that will limit their spending on other things and prevent them from buying their next car until sometime in the 2020s. 

Like all artificial (that is, credit-driven) booms, this had to end eventually, and it’s looking like now is the time: 

U.S. Auto Makers Post Sharp Sales Decline in June

(Wall Street Journal) – Detroit’s car companies reported steep sales declines in June, capping a bumpy first half of the year for the U.S. auto industry and setting a bleak tone for the summer selling season.

The reports, released Monday, come as analysts expect overall auto sales to have fallen more than 2% in June compared with the prior year, according to JD Power. The firm said the industry’s selling pace hit its lowest point since 2014 over the first six months of 2017, and traffic at dealerships—measured by retail sales—fell to a five-year nadir in June.

Edmunds.com, a consumer-research company, said buyers are stretching more than ever to afford cars and trucks that are growing increasingly more expensive due to a barrage of safety gear and connectivity options. The firm estimates the average auto-loan length reached a high of 69.3 months in June, with the average amount of financing reaching $30,945, up $631 from May.

General Motors Co. GM +2.91% said U.S. sales fell 5% to 243,155 vehicles, while Ford Motor Co. F +4.07% said sales totaled 227,979 vehicles, down 5.1% from a year earlier, and Fiat Chrysler Automobiles N.V. posted a 7% decline to 187,348 vehicles.

The following charts show a steady rise in car sales and inventories from their 2009 low to a 2015-2016 peak. If they’ve shifted into a cyclical decline the bottom, based on history, is a long way down. 

Auto-inventories-July-17



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Economic Outlook

Proof That This Economic recovery narrative is false

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Posted by Sol Palha - Tactical Investor

on Friday, 23 June 2017 10:21

A hallucination is a fact, not an error; what is erroneous is a judgment based upon it.

Bertrand Russell

The financial media has provided reams of data trying to lay out the case that this economic recovery is real. Many of the statistics provided do indeed support the theme that the outlook is improving. One must, however, keep these two facts in mind when looking at the data:

  • The Fed poured huge amounts of money into this market. Minus the money, this so-called economic recovery would have never come to pass

  • Due to the low-interest rate environment, corporation borrowed money on the cheap and poured billions into share buybacks since the crash of 2009.

Hence, while some of these statistics paint a rosy picture, the outlook is far from rosy as two key leading economic indicators have failed to confirm this recovery from the onset.

The Baltic Dry index is trading 92% below its all-time high. Now imagine the Dow was in the same position and the press instead of calling it a crash, made the assertion that we were in the midst of a raging bull market. You would think they were insane. Well, the same analogy applies today; this index clearly indicates that there is no recovery on a global basis and that hot money is creating the illusion of one. Remove this excess cash from the system, and the economy together with the stock market will collapse.

This once highly effective leading economic indicator appears to no longer work as the playing field has been altered. However, it is working, as it is indicating this recovery is nothing but a sham. It can longer be used as a tool to gauge the direction of the stock market or the strength of the economy because as stated hot money has altered the landscape.

Baltic Dry Index 2017

Copper another leading economic indicator also clearly illustrates that this recovery is a sham.



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Economic Outlook

Merkel Wants G20 Global Taxation of Internet

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Posted by Martin Armstrong - Armstrong Economics

on Thursday, 15 June 2017 07:51

Merkel-Explains

Markel is calling upon the G20 to regulate the internet. While she if pretending to be concerned about cyberattacks, which no regulator can prevent, you have to look into the finer details. Chancellor Angela Merkel called for a global regulation sayying: “Industry 4.0 will have to go through the process that we have already gone through at the World Trade Organization (WTO) with real trading operations that we have gone through in the G20 process with financial market regulation.” 

She noted that the “concerns” include “cyberattacks, the responsibility of social platforms to tax issues in international trade, and growing concern in the world Of policy. “

In other words, she wants to tax all sales on the internet. So anyone from Germany buying anything anywhere would have to pay VAT and every online merchant would have to comply with global regulation. Additionally, governments are increasingly becoming concerned about blockchain technology and the avoidance of taxes.

As always, government pretend to be concerned about security, but it is always about the money. She also wants to shut down anyone who talks against government in the social media.

....also from Martin:

Annual Growth Rates Have Dropped from 13% to 2% Since 1947 but Bill Gates Blames Robots?

First of all, robots are killing jobs because taxes and demand for benefits are going crazy. Health Care costs are consuming the net disposable income and government taxes, and the combination is conspiring to lower annual economic growth rates dramatically. Real GDP growth rates have been declining ever since World War II and the dawn of big government. These people just do not get it. They are the problem. GDP annual growth has declined from 13% down to 2%. Just where has big government helped?

....continie reading HERE



Economic Outlook

Visualizing the Jobs Lost to Automation

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Posted by Visual Capitalist

on Tuesday, 30 May 2017 13:55

What types of jobs will be lost to automation?

Today's data visualization applies probabilities from a well-cited study to current U.S. job numbers.

The end result: the most common jobs of today will not likely be the most common jobs of tomorrow.

View Larger Version "Visualizing the Jobs Lost to Automation"

automation-and-unemployment



Economic Outlook

How Long Can The Great Global Reflation Continue?

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Posted by Charles Hugh Smith - Of Two Minds

on Wednesday, 24 May 2017 08:32

balloon-sunset-169676768.jpg

And what will happen when it ends?

Every now and again, it’s good to take stock of the Great Global Reflation that has been marching higher (with a few stumbles and scares) since early 2009, over eight years ago.  

Is this Great Reflation running out of steam, or is it poised for yet another leg higher? Which is more likely?

Keynesianism Vs The Real World

Let’s start by reviewing the systemic contexts of the economy.

This Great Reflation is embedded in two basic contexts:

  1. The dominant socio-economic structures since around 1500 AD are profit-maximizing capital (“the market”) and nation-states (“the government”).
     
  2. The dominant economic theory for the past 80 years is Keynesianism, i.e. the notion that the state and central bank must aggressively manage private-sector consumption (demand) and lending via centrally planned and funded fiscal and monetary stimulus during downturns (recessions/depressions).

Simply put, the conventional view holds that there are two (and only two) solutions for whatever ails the economy: the market (profit-maximizing capital) or the government (nation-states and their central banks). Proponents of each blame all economic and social ills on the other one.

In the real world, the vast majority of Earth’s inhabitants operate in economies with both market and state-controlled dynamics in varying degrees.

The Keynesian world-view is doggedly simplistic.  The economy is based on aggregate demand for more goods and services.  People want more stuff and services, and as long as they have the means to buy more stuff and services, they will avidly do so (this urge is known as animal spirits).

The greatest single invention of all time in the Keynesian universe is credit, because credit enables people to borrow from their future earnings to consume more in the present. Credit thus expands aggregate demand for more goods and services, which is the whole purpose of existence in this world-view: buy more stuff.

But credit, aggregate demand for more stuff and animal spirits make for a volatile cocktail.  The euphoria of those making scads of profit lending money to those euphorically buying more stuff with credit leads to standards of financial prudence being loosened.  In effect, lenders and borrowers start seeing opportunities for profit and more consumption through the distorted lens of vodka goggles.

Lenders reckon that even marginal borrowers will earn more in the future and therefore are good credit risks, and borrowers reckon they’ll make more in the future (i.e. the house they just bought to flip will greatly increase their wealth), and so borrowing enormous sums is really an excellent idea—why not make more money/enjoy life more now?

But the real world isn’t actually changed by vodka goggles, and so marginal borrowers default on the loans they should never have been issued, and lenders start losing scads of money as the value of the collateral supporting the defaulted loans (used cars, swampland, McMansions, etc.) falls.

....continue reading HERE



Economic Outlook

WannaCry and the War Cycles

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Posted by David Dutkewych - Edelson Institute

on Friday, 19 May 2017 00:45

Here at the Edelson Institute, we follow the war cycles very closely: Larry’s research shows that the cycles of war and conflict continue to ramp up. And that this escalation will not peak until the year 2020.

A huge part of the war cycles is cyber-warfare. And we are witnessing just the beginning.

Case-in-point: The lingering ransomware attack that began in Europe last Friday and continues hitting new targets in Japan and China this week.

The WannaCry software has locked thousands of computers in more than 150 countries. This ransomware attack, which hit 370,000 computers, stands far and away as the most severe malware attack so far in 2017.

The spread of this troubling ransomware is far from over. There are reports that link this attack to North Korea. If confirmed, it will add to the growing tensions between the U.S. and North Korea.

This is on top of other massive cyber-wars between countries, of which the Russian hacking of the U.S. elections is just the most recent in a firestorm of examples. We also see cyber-espionage by governments against each other and against their own people.

A disruptive cyber-attack on critical infrastructure in the United States (e.g., telecommunications, electrical power grids, gas and oil reserves, water supplies, financial institutions, and transportation and emergency services) would be extremely harmful … and costly.

Screen Shot 2017-05-19 at 12.17.14 AMIn fact, Cybersecurity Ventures – which tracks and analyzes trends in cyber-misconduct – predicts the annual global costs of cyber-crime will balloon from $3 trillion in 2015 to $6 trillion by 2021.

You read that right: $6 trillion by 2021!

The $6 trillion includes the damage and destruction of data, plus stolen money and lost productivity. And don’t forget about the theft of intellectual property, personal and financial data, embezzlement, fraud, and post-attack disruption to the normal course of business … all of which adds up to huge sums of money to restore and replace.

That’s a staggering list of damages and a heck of an outlay of cash.

Bur, frankly, I’m not one bit surprised.

As the war cycles ramp up, cash-strapped, over-indebted nations are going to be forced to spend more money than ever on national security. And cyber-protection is just part of that equation.



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Economic Outlook

When Robots Take All of Our Jobs, Remember the Luddites

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Posted by John Mauldin - Outside the Boxn - Outside The Box

on Thursday, 04 May 2017 08:22

rise-of-the-robots-viIf you don’t think the transformation we’re embarked upon is a profound one, consider this: Within two decades, half the jobs in this country may be performed by robots. What then of our unemployment rate and social safety net? Opinion is divided: Will the next technological wave further skew the wealth distribution toward the uber-rich, or will it ultimately create more entrepreneurial and job opportunities than it destroys?

There is an interesting historical precedent for our situation, an era during which the technological firmament shifted just as abruptly as it is here and now. In the United Kingdom in the year 1800, the textile industry dominated economic life, particularly in Northern England and Scotland. Cotton-spinners, weavers (mostly of stockings), and croppers (who trimmed large sheets of woven wool) worked from home, were well compensated, and enjoyed ample leisure time.

Ten years later, that had all changed. Clive Thompson, the author of today’s Outside the Box,tells us what happened:



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