Wednesday, March 18, 2015

US Housing Starts Collapse Most in 4 Years As Clueless Yellen Sings Praises For “Full Employment”

(Bloomberg) — Housing starts slumped in February by the most in four years as bad winter weather in parts of the U.S. prevented builders from initiating new projects.
Work began on 897,000 houses at an annualized rate, down 17 percent from January and the fewest in a year, the Commerce Department reported Tuesday in Washington. The median estimate of 80 economists surveyed by Bloomberg called for 1.04 million.
“It was just the weather, basically,” said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama. Still, “my view of the recovery in single-family housing is that it’s coming more gradually than others think.”
An increase in building permits was driven by applications for multifamily units, indicating single-family construction, the biggest part of the market, will keep struggling. While stronger hiring and low borrowing costs have helped the industry advance, sales remain challenged by limited supply of cheaper homes and sluggish wage growth.
The median estimate of 81 economists in the Bloomberg survey called for 1.04 million starts. Estimates ranged from annualized rates of 975,000 to 1.08 million after a previously reported January pace of 1.07 million.
http://www.bloomberg.com/news/articles/2015-03-17/home-starts-plunge-on-weather-while-u-s-building-permits-rise
The jobless rate, at 5.5%, is now at the Fed’s most recent estimate of “full employment”
The U.S. economy added 295,000 jobs in February, the 12th straight month where job gains surpassed 200,000. That adds up to 3.3 million net new jobs, the best yearlong period of job gains in nearly 15 years.
image: http://si.wsj.net/public/resources/images/BN-HG900_030616_G_20150306090159.jpg
The headline jobless rate declined to 5.5%, the lowest since May 2008 and down from 5.7% in January. Measures of unemployment that include discouraged workers and marginally attached workers also declined. The broadest measure of underemployment, which also includes part-time workers who would like full-time work, declined to 11%, from 11.3% last month.

The tensions, imbalances, distortions and malinvestment that caused the 2008 meltdown are much worse today than they were then. And the same clueless people are still in charge.

By BILL BONNER, CHAIRMAN, BONNER & PARTNERS
Dear Diary,
The stock market paused to draw breath yesterday. The Dow ended up more or less where it started.
Not a bad day. Not a good day either. There was no bounce afterTuesday’sdizzying slide.
September 15, 2008, was a really bad day on Wall Street….
Lehman Brothers sought Chapter 11 bankruptcy protection. The Dow plummeted more than 500 points.
Putnam Investments shut a $12.3 billion money-market fund. Mizuho Trust & Banking cut its profit forecast in half. And the New York Stock Exchange halted trading in Constellation Energy, after its stock dropped 57%.
But this was just the start, not the end…

The Day the Cash Disappeared

The following Thursday, the Federal Reserve noticed an odd and alarming trend: Cash was disappearing. Outflows from money market accounts topped $550 billion in less than two hours.
If that had continued, Representative Paul Kanjorski of the 11th congressional district of Pennsylvania recalled:
The Treasury opened up its window to help and pumped $105 billion into the system. And it quickly realized it could not stem the tide.
We were having an electronic run on the banks. They decided to close down the operation… to close down the money accounts. […]
If they had not done so, in their estimation, by 2 p.m. that day $5.5 trillion would have been withdrawn. That would have collapsed the US economy. Within 24 hours, the world economy would have collapsed.
We talked at that time about what would have happened. It would have been the end of our economic and political system as we know it.
People who say we would have gone back to the 16th century were being optimistic.
Neel Kashkari, the man fellow Goldman Sachs alum Hank Paulson appointed to oversee the Troubled Assets Relief Program (TARP), elaborated. He was talking about what didn’t happen in 2008:
“Literally your ATM wouldn’t work. You type in your code and no money comes out. You get your paycheck; you can’t cash it.”
“The money was so tight that ATMs could have stopped working. It could have really gotten out of control,” adds Lawrence McDonald, coauthor of the New York Times bestseller A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman.

“I Want You to Go to the ATM…”

Few people grasped what was happening: For the first time in history, a credit-based financial system was melting down.
And those who understood it least were those in control of it.
Announced then Fed chairman Ben Bernanke on June 10, 2008:
The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.
Although Bernanke had no idea what was going on, some people did. One of them knew what to do, too:
On Friday night, I called my wife and I said, “Brooke, I am not coming home this weekend. I will call you on Monday. Tonight, I want you to go to the ATM, and I want you to draw out everything it will let you take. And I want you to go tomorrow, and I want you to go again Sunday.”
Richard Burr, US senator from North Carolina, was convinced, he said, “that if you put a plastic card in an ATM the last thing you were going to get was cash.”
Every financial system must encounter stress from time to time. The shock of 2008 was severe.
But it never got to the level that Senator Burr feared.
Next time, we predict it will. And then some.
Because the tensions, imbalances, distortions and malinvestment that caused the 2008 meltdown are much worse today than they were then.
And the same clueless people are still in charge.

Vanishing Cash

By some measures, the US stock market is more overvalued than it was in 2008.
There are bubbles in auto loans, student loans, biotech stocks and corporate bonds. And there is $8 trillion more in public and private debt in the US alone.
What’s more, the Fed has already played the ace up its sleeve. It has sucked up roughly $4 trillion in Treasury bonds as well as Fannie Mae, Freddie Mac and Ginnie Mae mortgage bonds. And it has held short-term interest rates on the floor for the last six years.
And there they have stayed, doing nothing but further enriching the rich and further distorting an already grotesque and unnatural economy.
Next time a crisis comes, millions of people will take the advice Senator Burr gave to his wife…
They will rush the ATMs.
And dollars – old-fashioned paper greenbacks – will vanish.
More to come…
Regards,
image: http://ci6.googleusercontent.com/proxy/WVQbND-8cV6AWnYsiu8wv_HJh8LzuFFIOG9lvr4E3oJQmYcw5xON_cXjZHquDZYVhzTMajPwOkx_qwMlmbsFn-oLsYP4Dbudsrujt-c1IbDMkRTLu8maEzvKLECFxVlavDp1Fhk=s0-d-e1-ft#http://www.bonnerandpartners.com/wp-content/uploads/2013/09/Bill-Bonner_sig.png
Signature
Bill
Further Reading: Bill recently told paid-up Bill Bonner Letter subscribers how he’s preparing for the next big crisis. We’ll give you a risk-free trial subscription when you pick up your copy of Bill new book, Hormegeddon. All for just $4.95.Learn how to protect your assets here.

Britain's big six energy giants see their profits rise almost 1,000% in just five years as family bills soar

  • Between 2007 and 2013 energy firms' profits soared from £110m to £1.1bn
  • In 2007 the energy giants were pocketing £2.31 in profit from each family
  • By 2013 this had risen to £23.71, the Competition & Markets Authority said

Britain's big six energy giants have seen their profits rise almost 1,000 per cent in just five years, new analysis has revealed.
Between 2007 and 2013 the energy firms' profits soared from £110million to £1.1billion, the competition watchdog found.
In 2007 the energy giants were pocketing £2.31 in pure profit from each household for their gas or electricity. By 2013 this had risen to £23.71, according to the Competition and Markets Authority.
Between 2007 and 2013 Britain's big six energy firms saw their profits soar from £110million to £1.1billion
Between 2007 and 2013 Britain's big six energy firms saw their profits soar from £110million to £1.1billion
Families with gas and electricity dual fuel were handing over £1.32 in profit in 2007 - when gas supply was loss-making – but now pay £48.16 extra.
A typical dual fuel bill increased by 45 per cent over the same period, from £841 in 2007 to £1,217 in 2013, the Telegraph reported.
Tom Greatrex, Labour's shadow energy minister, said: 'This is yet more evidence that energy companies are increasing their profits on the back of spiralling bills for households and businesses.
'The next Labour Government will freeze energy prices until 2017, so that bills can only fall and not rise, and give the regulator the power to cut bills in time for winter.'
The energy companies will claim the £23.71 which they make from each family every year amounts to a tiny 3.9 per cent profit margin before interest and tax.
This is lower than the 5p-in-a-£1 target most of the suppliers claim would be justifiable.
The Competition and Markets Authority launched an investigation into the energy sector last year amid allegations companies were ripping off their customers.
The watchdog found most energy companies made much higher profit margins on their standard variable tariffs – those that the majority of their customers remain on - than on fixed price deals.
Labour's shadow energy secretary Caroline Flint has accused the big six of increasing their profits on the back of spiralling bills for households
Labour's shadow energy secretary Caroline Flint has accused the big six of increasing their profits on the back of spiralling bills for households
Ofgem, the energy regulator, has claimed the major suppliers are set to make more than £110 per household for both gas and electricity over the next 12 months.
The analysis also masks significant variation in the fortunes of each of the Big Six - British Gas, SSE, ScottishPower, EDF Energy, E.On and Npower.
An Ofgem report last year showed EDF was consistently loss-making in recent years – while British Gas made consistently higher profits than anyone else.
Last month the Competition and Markets Authority claimed the vast majority of British families had been paying £234 too much for their energy because companies charged loyal customers higher prices.


China Gaining Western Allies as Development Bank Partners: “A Blow to U.S. Efforts”

CHINA-ECONOMY-RATE-BANK-FOREX
Recently, SHTF has pointed out the rise of China and their aim to become a major part of the new global reserve currency, and hence a major weight in the new global order.
China’s renminbi is positioning for major global exchange; the BRICS development bank is taking off, to the chagrin of the U.S. axis of global finance; and the IMF is talking with China about the likelihood of including the yuan in the “basket of currencies” that make up SDRs, or Special Drawing Rights that already includes the dollar, the pound, the euro and the yen:
China is pushing for the International Monetary Fund to endorse the Chinese yuan as a global reserve currency alongside the dollar and euro.
A senior Chinese central bank official said Thursday that the country is “actively communicating” with the IMF on the possibility of including the yuan, or RMB, in the basket of the Special Drawing Rights (SDRs).
Now, American leadership is silently watching Anglo partners – and close establishment allies in the post-war world – join ranks with China on its emerging development bank.
Washington’s Blog reports:
This week, 2 major U.S. allies – 2 of the “Five Eyes” – have disregarded American pleas and joined China’s new development bank … alternative to the US-dominated IMF and World Bank lending order. (A third member of the Five Eyes – New Zealand – previously signed onto the Chinese bank.)
The Financial Times now reports that France, Germany and Italy have all agreed to join the China-led international development bank as well, “delivering a blow to US efforts to keep leading western countries out of the new institution.”
Both FT and the New York Times have pointed the implicit threat to U.S. hegemony since World War II… yet another sign that things are changing:
Via FT:
[The decision of the UK to join the Chinese development bank was made with] virtually no consultation with the US.
We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power.
Via NYT:
Fundamentally, Washington views the Chinese venture as a deliberate challenge to those postwar institutions, which are led by the United States and, to a lesser extent, Japan, and the Obama administration has put pressure on allies not to participate…
What exactly is on the horizon for global finance and the new world order? China is clearly a major part of whatever is to come.

MORE: Nearly 30 countries have confirmed joining China-led infrastructure bank

The finance ministries of France and Germany have confirmed they’ll join China’s new Asian Infrastructure Investment Bank (AIIB), and Italy is expected to soon. Joining the rival to the US-led World Bank is seen as a setback for the Obama administration.
“The Ministry of Finance confirmed that France would join the AIIB bank,” French daily Le Figaroreported Tuesday.
Germany’s finance ministry said it was joining the bank, the BBC says, although Italy has yet to confirm the earlier report by the Financial Times (FT).
The decision comes after Britain last week became the first Western country to agree to become a founding member of the AIIB, FT reports. The UK government said the decision was in the country’s national interest, but it got a negative reaction from the United States.
The new China-led bank is expected to challenge the Washington-based World Bank, so the US is increasing pressure on its allies not to join the institution. The US’ concern is that the new investment bank might not have high standards of governance and environmental and social safeguards.
The new bank is expected to challenge the Western dominance of the US-led World Bank and IMF in global infrastructure projects, which experts believe will create healthy competition.
http://rt.com/business/241365-china-bank-eu-usa/

Major American Allies Ignore U.S. Pleas and Join China’s Alternative Bank

Source: Washington's Blog

UK, Australia, New Zealand, Singapore and India All Sign On … South Korea Next?
Update: The Financial Times now reports that France, Germany and Italy have all agreed to join the China-led international development bank as well, “delivering a blow to US efforts to keep leading western countries out of the new institution.”
This week, 2 major U.S. allies – 2 of the “Five Eyes” – have disregarded American pleas and joined China’s new development bank … alternative to the US-dominated IMF and World Bank lending order. (A third member of the Five Eyes – New Zealand – previously signed onto the Chinese bank.)
Specifically, the UK and Australia signed on this week.
The Financial Times reports, quoting a senior US Official:
[The decision of the UK to join the Chinese development bank was made with] virtually no consultation with the US.
We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power.
The New York Times reported last week:
Fundamentally, Washington views the Chinese venture as a deliberate challenge to those postwar institutions, which are led by the United States and, to a lesser extent, Japan, and the Obama administration has put pressure on allies not to participate…
***
South Korea and Australia, both of which count China as their largest trading partner, have seriously considered membership but have held back, largely because of forceful warnings from Washington, including a specific appeal to Australia by President Obama.
Zero Hedge predicted last week:
In short order Australia and South Korea will likely be on board and at that point, the stigma the US has created around membership will have completely disappeared (if it hasn’t already), opening the door for other US “allies” to join ….
An Op-Ed in The Australian argues:
The decision by the Abbott government to sign on for negotiations to join China’s regional bank … represents another defeat for Barack Obama’s diplomacy in Asia.
***
Canberra’s move follows similar decisions by Britain, Singapore, India and New Zealand.
Make no mistake — all this represents a colossal defeat for the Obama administration’s incompetent, distracted, ham-fisted dip­lomacy in Asia.
***
Since then, the Abbott government has felt absolutely zero subjective good will for Obama.
This is an outlook shared by many American allies.
***
The Obama administration has neither the continuous presence, nor the tactical wherewithal nor the store of goodwill or personal relationships to carry Canberra, or other allies, on non-essential matters.
***
Such prestige as the US enjoys in Asia these days rests disproportionately on the shoulders of the US military.
Obama has neglected and mistreated allies and as a result Washington has much less influence than previously.
The saga of the China Bank is almost a textbook case of the failure of Obama’s foreign policy.
***
Obama treats allies shabbily and as a result he loses influence with them and then seems perpetually surprised at this outcome.
***
The consensus is that the Obama White House is insular, isolated, inward-looking, focused on the President’s personal image and ineffective in foreign policy.

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The speed of the euro’s decline is starting to put seasoned market-watchers on edge

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The speed of the euro’s decline is starting to put seasoned market-watchers on edge http://on.wsj.com/1CmLt7t 
 
The speed of the euro’s decline is starting to put seasoned market-watchers on edge.
Monday, the currency hit another 12-year low, an almost daily occurrence right now, with the rate touching $1.0457.
This is marvelous news for the funds that have bet on a slide.
But with the euro now down by almost 13% against the dollar so far this year and counting, it’s all happening very quickly. Many analysts had penciled in $1.05-ish for the end of this year. Now they’re scrambling for ‘more bearish than thou’ forecasts under parity.
As a general rule, major currencies just don’t move as sharply as this. Emerging-markets currencies sometimes, but not the big tectonic plates like the euro.
http://blogs.wsj.com/moneybeat/2015/03/16/the-euro-and-the-risk-of-a-squeeze/

 

THE SYRIZA EXPERIMENT: Wolfie the werewolf goes Greece-impaling

BY JOHN WARD
The German finance minister has been talking at a CDU conference about how the Greek Syriza experiment is doomed to fail. He’s been talking to most of the press as well, and apparently at one point buttonholed a startled security guard. Later he was seen accosting passing strangers and saying, “I have been talking viz all my friends who helped create zis perfect currency zone und none of them can tell me vot zis crazy Syrisa plan is about, zose cheeky little Greekies eh, hohohohoh.” Poor Wolfie gets bored very easily.
Anyway, Wolfgang Schäuble hasn’t a clue how the Syriza plan is going to work. Herr Schäuble has a wonderful modus operandum that goes like this:
1. Impose mad anti-economics out of anal German 1923 complex, removing all ability to grow or consume.
2. Forbid Papandreou the right to a referendum.
3. Make nasty noises about the Greeks being foolish enough to vote
image: http://images.intellitxt.com/ast/adTypes/icon1.png
against pointless austerity. 4. Conspire with Italian capot and Dutch hairdresser to strangle what’s left of Greek banking system.
5. Ambush Varoufakis and give his wings a crewcut.
6. Shake his head and say, “What on Earth makes you think you can fly?”
It’s an old trick, and if you’re a completely tonto ball of bile, it’s also really quite logical: “Haff you effa notissed how, ven you pull ze legs off a spider, it goes deaf? Even if you are zrowing it on ze fire, it cannot hear the order to get off ze fire. Ziss iss vairy interestink.”
Except of course, Schäuble is neither stupid or mad, just cunning in a germanicallythe controlling manner. Example: how do we solve the Greek debt problem caused by poorly targeted banking loans and a greedy elite at the top of society? Easy: do a deal with the greedy elite, ignore the evidence condemning the banks, and tax the backsides of the ordinary Greeks who had nothing to do with it.
When the piggy-eyed elite get deservedly booted out by the People during one of those unfortunate flaws in democracy An Election, get spiteful about the fact that the greedy elite you trusted so much has been rejected by these ingrates, and even more hacked off about the fact that Athens raised some money without the help of Brussels-am-Berlin. Offer support as follows:
image: http://hat4uk.files.wordpress.com/2015/03/zh-schauble.png?w=812
ZH Schauble OK sports fans, join up the dots in this plausible dishonesty. “By doing something practical towards making an examination test (set by me) vaguely possible to complete in four months, the examinees have destroyed all confidence in the exam, despite the fact that neither I nor the markets have displayed any confidence in it from the outset, and we changed the entire content of the paper the night before the exam. These people are just impossible to deal with”.
Bild Zeitung is holding the front page as I speak. Meanwhile, down in his anti-discussion attack shelter, Dr Strangelove (for it is he) is playing with a little bird for the amusement of his kittens Portugal, Spain and Italy:
“Kom’ hier mein kleiner’s Kinder, und observe as ze little Griechenvögel triess to hop avay, I snatch him backhahah. Take zees broken vings und learn to flyhohoho. Und errinern Sie immer: alvays remember to schnitzel before you noodle. Uzzerweiss you might schizel in your Strudel, and zen zere vould be a terrible mess, nicht? Und if zere is von sing ve Germans cannot stand  it is mess. Vell…mess, and being defeated. Auch zen havink to pay for ze damage. Und Untermenschen mit de strinkvests und ze greasy hair poking through. Zey should stick zose marbles up zeir fat arses. Effryone tells me zis Varoufuckvit is a great game planner, but he iss an amateur – an amateur I tell you. I vill show you game-plannink: zat Yanis, he blows three veeks getting nowhere but I, I Schäuble Zer Grosse….ven I play games viz ze media, one plan is kaput, half a day.”
Ah well, Happy Tuesday. Onwards and Upwards, or something.

US Hits Debt Ceiling again but this Could be Worse, Default Looms for Oct 2015


U.S. urges allies to think twice before joining China-led bank

U.S. allies head to China-backed bank (02:15)
(Reuters) - The United States urged countries on Tuesday to think twice about signing up to a new China-led Asian development bank that Washington sees as a rival to the World Bank, after Germany, France and Italy followed Britain in saying they would join.
The concerted move by U.S. allies to participate in Beijing's flagship economic outreach project is a diplomatic blow to the United States and its efforts to counter the fast-growing economic and diplomatic influence of China.
Europe's participation reflects the eagerness to partner with China's economy, the world's second largest, and comes amid prickly trade negotiations between Brussels and Washington.
European Union and Asian governments are frustrated that the U.S. Congress has held up a reform of voting rights in the International Monetary Fund that would give China and other emerging powers more say in global economic governance.
Washington insists it has not actively discouraged countries from joining the new bank, but it has questioned whether the Asian Infrastructure Investment Bank (AIIB) will have sufficient standards of governance and environmental and social safeguards.
"I hope before the final commitments are made anyone who lends their name to this organization will make sure that the governance is appropriate," Treasury Secretary Jack Lew told U.S. lawmakers.
Lew warned the Republican-dominated Congress that China and other rising powers were challenging American leadership in global financial institutions, and he urged lawmakers to swiftly ratify stalled reform of the IMF.
German Finance Minister Wolfgang Schaeuble announced at a joint news conference with visiting Chinese Vice Premier Ma Kai that Germany, Europe's biggest economy and a major trade partner of Beijing, would be a founding member of the AIIB.
In a joint statement, the foreign and finance ministers of Germany, France and Italy said they would work to ensure the new institution "follows the best standards and practices in terms of governance, safeguards, debt and procurement policies."
Luxembourg’s Finance Ministry confirmed the country, a big financial center, has also applied to be a founding member of the $50 billion AIIB.
The AIIB was launched in Beijing last year to spur investment in Asia in transportation, energy, telecommunications and other infrastructure. It was seen as a rival to the Western-dominated World Bank and the Asian Development Bank. China has said it will use the best practices of those institutions.
A spokeswoman for the European Commission, the EU's executive arm, endorsed member states' participation in the AIIB as a way of tackling global investment needs and as an opportunity for EU companies.
The World Bank is traditionally run by a U.S. nominee and Washington also has the most influence at the IMF.
The adjustment of shares and voting rights in the IMF was brokered by Britain at a Group of 20 summit in 2010, and European countries ratified it long ago.
Lew told lawmakers that the U.S. delay in ratifying the agreement was undermining its credibility and influence as countries question the United States' commitment to international institutions.
“It's not an accident that emerging economies are looking at other places because they are frustrated that, frankly, the United States has stalled a very mild and reasonable set of reforms in the IMF,” Lew said.
The reforms would double the fund's resources and hand more IMF voting power to countries such as the BRICS - Brazil, Russia, India, China and South Africa.
Some Republicans have complained the changes would cost too much at a time Washington is running big budget deficits. The reforms have also ran afoul of a growing isolationist trend among the party's influential Tea Party wing.
"HIGH WATERMARK"
China said earlier this year a total of 26 countries had been included as AIIB founder members, mostly from Asia and the Middle East. It plans to finalize the articles of agreement by the end of the year.
China's state-owned Xinhua news agency said South Korea and Switzerland were also considering joining.
Chinese Foreign Ministry spokesman Hong Lei would not comment on which countries had applied, and repeated that the bank would be "open, inclusive, transparent and responsible."
Washington says it sees a role for the IAAB given Asia's immense infrastructure needs and regards it as a potential partner for established institutions like the ADB.
But its strategy of questioning the IAAB's standards has drawn criticism from some observers, who say the administration should have been more accepting of the new bank or offered alternatives within the existing institutions.
"If you try to fight the rising power's peaceful ascent you sow big problems in the future," said Fred Bergsten, a former top international affairs official at the U.S. Treasury and currently a fellow at the Peterson Institute in Washington.
Scott Morris, a former U.S. Treasury official who led U.S. engagement with the multilateral development banks during the first Obama administration, said Washington was paying the price for delay on IMF reform.
"It's a clear sentiment among a pretty diverse group of countries: We would like to mobilize more capital for infrastructure through MDBs (multilateral development banks)," said Morris, now with the Washington-based Center for Global Development.
"And the U.S. stands in the way of that and now finds itself increasingly isolated as a result.”
A government official in India, which also has joined, said the members of the AIIB would meet in Almaty, Kazakhstan, on March 29-31 to discuss the articles of agreement.
China has said March 31 is the deadline for accepting founder-members into the organization.
Japan, Australia and South Korea remain notable regional absentees from the AIIB. Australian Prime Minister Tony Abbott said at the weekend he would make a final decision on membership soon. South Korea has said it is still in discussions with China and other countries about possible participation.
Japan is unlikely to join the AIIB, but ADB head Takehiko Nakao told the Nikkei Asian Review that the two institutions were in discussions and could work together.
(Additional reporting by David Brunnstrom, Anna Yukhananov, and Douwe Miedema in Washington; Yann Le Guernigou and Marine Pennetier in Paris; Erik Kirschbaum in Berlin; James Mackenzie in Rome; Ju-min Park in Seoul; Michael Martina and Ben Blanchard in Beijing; Manoj Kumar in Delhi; and Leika Kihara in Tokyo; Writing by Paul Taylor and Stuart Grudgings; Editing by Gareth Jones and Leslie Adler)

No, the minimum wage isn't forcing these Seattle restaurants to close

Anti-minimum wage conservatives are in full gloat over a recent report in a Seattle magazine that lots of Seattle restaurants have closed lately or are due to close in the next weeks or months.
The conservatives gleefully associate this phenomenon with the coming increase in the city's minimum wage, which kicks in April 1 with a rise to $11 an hour from $9.32. (Employers whose workers earn tips get a break--they can pay $10 if the workers make up at least another dollar from their tips.) The wage hike builds over time; for employers with fewer than 500 workers, which would probably cover every full-service Seattle restaurant, the ultimate increase to $16.49--or $15 for tip earners--doesn't happen until 2021. 
David Watkins of the Lawyers, Guns & Money blog points out that the minimum wage opponents are declaring "We told you so" way too soon. In fact, the article that inspired the gloating doesn't ascribe any of the closings to the minimum wage increase and, indeed, points to different reasons in every case. As for the idea that Seattle restaurants are "closing in record number" (sic), as the Tea Party News Network proclaims, it's just not so.
Here's the rundown. Of the seven restaurants specifically mentioned in Seattle Magazine's March 4 post, one was reported by its owner to be located in the wrong neighborhood for its particular mix of bar space and atmosphere. Another is being offloaded by an owner who has three other restaurants in the city and is opening two more. (A neighboring restaurant is expanding into its space.) A third turned out to be too big for the clientele at its location. Three aren't closing at all, but are getting new chefs because their old boss is moving to Spain to join his partner.
How many owners cited the minimum wage as a factor in their actions? None.
There are some mild intimations in the article that Seattle restaurateurs are thinking about how to accommodate the wage increase. These come mostly from an industry lobbyist, although local reporters have been collecting expressions of concern from restaurant owners about how the wage increase will thin their profit margins.
The Seattle Magazine piece observes, on the other hand, that the market in new restaurant openings is very active. And Watkins points out that Seattle remains one of the most vibrant and competitive restaurant cities in the country; Jed Kolko of Trulia calculates that it boasts the third highest concentration of eateries in the country, at 24.9 per 10,000 households, behind only San Francisco (by a huge margin) and the New York metropolitan area.
That doesn't mean that the minimum wage increase won't make the Seattle restaurant business harder. But so far it doesn't seem to have made a dent in diners' choices.
Keep up to date with the Economy Hub. Follow @hiltzikm on Twitter, see our Facebook page, or email mhiltzik@latimes.com.
Copyright © 2015, Los Angeles Times

Italy, Spain to follow if Greece exits eurozone, says Greek defense minister

Panos Kammenos, Greece’s defense minister, spoke to German newspaper “Bild” on Saturday, saying his country’s leaving the euro could precede an exit by Italy and Spain, followed by Germany in the future. “If Greece explodes, Spain and Italy will be next and then at some point, Germany. We therefore need to find a way within the eurozone, but this way cannot be that the Greeks keep on having to pay,” Kammenos told Bild. Berlin to pay for WWII reparations Instead of a bailout, Greece needed a debt “haircut” like the one Germany’s creditors had to accept in 1953, Kammenos proposed. He also argued that Berlin should pay World War II reparations to Athens. “All European countries have been compensated for crimes committed by Nazis, except for Greece,” Kammenos said, referring to the gold Nazi soldiers brought back from Athens during the war. The defense minister also accused Germany of “interfering” in its domestic affairs. His criticism was aimed at German Finance Minister Schäuble, who earlier warned of a “Grexident” which could push Athens out of the euro. “I don’t understand why he turns against Greece every day in new statements. It’s like a psychological war and Schäuble is poisoning the relationship between the two countries through that,” he said.

Source and full story: Deutsche Welle, 14 March 2015

The Undebtors: Sworn Enemies of the Vampires of Debt

by Charles Hugh-Smith
Those who refuse debt, regardless of the sacrifice, are starving the parasitic, exploitive machine; those with debt are feeding it.
We hear a lot about debtors, and very little about undebtors. I define an undebtor as an individual or entity that has sworn off debt or considers debt a necessary evil that must be paid off as quickly as possible regardless of the sacrifices required to do so.

Undebtors are created by these conditions:
1. People with cultural/familial values that eschew/fear debt.
2. People who have been crushed by debt in the past and refuse to repeat the experience.
3. People who recognize debt as the status quo’s favored instrument of oppression, control and exploitation.
4. People who understand that paying off debt is the easiest way to earn a zero-risk significant return on one’s money.
If you pay off a 12% credit card, that’s the equivalent of earning 12% on your money.
There’s no mystery as to the low profile of undebtors in the mainstream media: undebtors are the equivalent of the cross to the vampire-parasites peddling debt.How can banks and other financial parasites make money off the undebtors? They can’t, and therein lies the problem for the status quo, which lives off the blood of debt extracted from debt-serfs.
image: http://www.oftwominds.com/photos2015/vampires-of-debt.jpg
The profits skimmed off debt fuel the speculative gambles that benefit Wall Street, and fund the politico lackeys and toadies who enforce the power of banks and Wall Street.
Debt also funds insurance companies and pension funds. Remember, every student loan dragging a starving student into servitude is owned by a pension fund or insurer as a solid, high-yield asset and every subprime auto loan that is extracting a pound of flesh from a marginal borrower feeds Wall Street’s profit machine.
People talk about starving the machine. You want to truly starve the machine? Get out of debt and stay out of debt, regardless of the sacrifices needed to do so.I personally know many immigrants to the U.S. who paid off 30-year mortgages in four years or less. How did they do it?
1. Everyone in the family 16 or older worked.
2. Everyone’s earnings went to pay off the mortgage.
3. No money was squandered on cable, dish TV, eating out, new clothing, costly vacations, etc. Zip. zero, nada.
There was a saying in the 1960s–you’re either part of the solution or you’re part of the problem. Those who refuse debt, regardless of the sacrifice, are starving the parasitic, exploitive machine; those with debt are feeding it.
Yes, I have debt, too, but we are doing everything in our power to pay it off as soon as possible. That’s all anyone can do. But it’s important to do so, starting now.

It’s amazing to me how so many intelligent people just don’t understand what is happening…

If Economists Were Right, You Would Have a Raise by Now
States show weakening link between their jobless rates and wage growth
Six years into the U.S. expansion, the link between falling unemployment and rising wages — once almost as basic to economic theory as supply and demand — seems to be coming unhinged.
The disconnect is puzzling to people like Colorado Governor John Hickenlooper. With one of the best growth rates among the 50 states, a population that’s younger and better educated than the nation’s and a jobless level that’s fallen further and faster than the national average, Colorado seems to have everything going for it.
Yet the rise in the state’s median wage since the recession ended in mid-2009 has averaged just 1.1 percent a year, based on data from the federal government’s Current Population Survey. That’s no better than the lackluster 1-percent-to-2-percent national pace. What gives?
“The whole notion that wage growth has been lagging job growth — that’s the crux of the problem here,” Hickenlooper said in an interview. “We’re working very hard to figure out why.”
If the current trend continues, millions of working Americans could wait years to recover economically from the last recession and spend most of their adult lives in an economy in which low unemployment doesn’t generate the wage growth needed to lift living standards.
Nationally, the U.S. unemployment rate dropped to 5.5 percent in February, the lowest in almost seven years, according to figures from the Labor Department. Accompanying that decline was only a 0.1 percent, or 3 cent, monthly rise in average hourly earnings.
http://www.bloomberg.com/news/articles/2015-03-16/your-wallet-isn-t-getting-fatter-as-economics-101-comes-unhinged
Wages usually go up as jobless rates go down. But not if the decline is due to fewer people looking for jobs.
With unemployment finally starting to ease after years of what was often described as a “jobless” economic recovery, there’s some concern that globalization, by keeping a lid on U.S. wages, will derail the recovery’s momentum.
Usually when the jobless rate declines, wages start to inch up as employers compete for workers. When the Federal Reserve starts seeing wages grow, it will pull in the reins and start raising short-term interest rates.
“The Fed’s job is to lean against too-rapid job growth, because in all modern economic cycles employers began to compete for employees by paying higher wages, ultimately producing inflation,” Inman News columnist Lou Barnes explains. “The optimists are out of their minds today, cheering the health
image: http://images.intellitxt.com/ast/adTypes/icon1.png
of the economy, but the income/unemployment disconnect is without precedent — although it does connect to a different view of the world.” Without wage growth, the deflationary environment we’re in today could put a chill on home sales, Barnes and other knowledgeable observers fret. It might be too early in the recovery to get worked up about the lack of wage growth so far, economist Tim Duy writes on his blog, Fed Watch.
http://www.inman.com/wire/wait-for-it-wait-for-it-wage-growth/?utm_source=20141006&utm_medium=email&utm_campaign=dailyheadlinespm#.VQfrdo5bUpw