Tag Archives: Economics

Bill Bonner: This Unexpected Event Will Cut the S&P 500 in Half

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“Profits are higher – in no small part because the Fed’s ZIRP has made it possible to borrow cheaply. Companies used the cheap credit to do two important things:  1) Refinance expensive debt, lowering interest expenses and thereby pushing up net profit margins;  2) Buy back their own shares, raising their share prices.  It’s not likely they’ll be able to repeat the trick in 2014. Because interest rates are moving up.  If you can earn 3% on “risk free” Treasurys… does it make sense to buy overvalued stocks? Real estate? Andy Warhol doodles?  Will any investment do better than 3%? Is the extra risk worth the extra reward?”

http://www.bonnerandpartners.com/this-unexpected-event-will-cut-the-sp-500-in-half/

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Jobless Jokes

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“Reuters writers and editors want to lead with an upbeat jobs report but then a few grafs later they’re admitting ‘the holiday season has made recent claims data so volatile it has been difficult to interpret.’  Twenty years ago we didn’t get it. Ten years ago we started to smell it. Today we know without doubt these sorts of reports are mostly promotional mumbo jumbo.  These stats can be offered any way that the media and officials in charge want to spin them. And, of course, these days the bias is always upwards.  We’re supposed to believe everything is getting better after the 2008 downturn. Of course, what’s not mentioned is that the entire business cycle has been short-circuited.”

http://www.thedailybell.com/news-analysis/34867/Jobless-Jokes/

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Ron Paul: Government Policies Hurt Low-Wage Workers

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“Unskilled and inexperienced workers are the ones most often deprived of employment opportunities by increases in the minimum wage.  By increasing unemployment, government policies like minimum wage laws only worsen inequality. Those who are genuinely concerned about increasing the wellbeing of all Americans should support repeal of all laws, regulations and taxes that inhibit job creation and economic mobility. Congress should also end the most regressive of all taxes, the inflation tax, by ending the Federal Reserve.”

http://www.thedailybell.com/editorials/34871/Ron-Paul-Government-Policies-Hurt-Low-Wage-Workers/

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Walmart Shoppers: Pay 15% More to Give Workers a Raise. No Takers?

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“Peter Schiff had a great idea. Go into a Walmart parking lot and try to persuade shoppers to accept a 15% increase on their bills. Why? In order to pay Walmart employees $15 an hour.  He tells them that he represents an organization called ’15 for 15.’ Very creative name! Then he presents his plan.  There were no takers.  His point: Walmart shoppers are there to pay low prices, not pay high wages. Amazing concept!  Customers don’t want to pay high wages. They want to pay low prices. It’s not just Walmart’s customers. It’s all customers.”

http://teapartyeconomist.com/2013/12/28/video-trying-get-walmart-shoppers-pay-15-give-workers-raise-takers/

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Fast food CEO: How govt regulation is driving us abroad

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“Andy Puzder, the CEO of CKE Restaurants, the parent company of Hardee’s and Carl’s Jr., should know. His company is expanding rapidly abroad due to higher potential outside the U.S., which is hampered by what he sees as too much government regulation.  Over the last three years, Hardee’s and Carl’s Jr. opened more restaurants internationally than in their own backyards—a first, he added. CKE now operates restaurants in 30 foreign countries.  ‘Under the current U.S. business climate, regulatory and tax restrictions tend to curb otherwise dynamic entrepreneurial energy,’ Puzder said. ‘Unfortunately, it’s easier for our franchisees to open a restaurant in Siberia than in California.'”

http://www.cnbc.com/id/101302181

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Overstock CEO: ‘I don’t own bitcoin, but I’m a fan’

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“There are business and philosophical reasons. First, the business reason: I think there are a legitimate number of consumers who want to be able to shop with bitcoin. They like the anonymity of the currency. So far, the market has only served them with shady websites, like Silk Road. Also, it saves us about 2% from interchange fees. It’s no secret that our net margin is about 2% now. And so the savings would be a very substantial improvement to our bottom line.  As far as the philosophical reason: I am from the Austrian School of Economics.  We’re not going to get rid of the Federal Reserve any time soon, so bitcoin is a step in the right direction.”

http://finance.fortune.cnn.com/2013/12/24/overstock-ceo-bitcoin/

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Paul Krugman Is Wrong: Bitcoin Isn’t Evil, But Monetary ‘Stimulus’ Is

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“Krugman asserts that bitcoin is evil because it is a ‘weapon intended to damage central banking’ and makes it harder for states to tax and monitor people. He gets it exactly backwards. A weapon is a tool used to attack someone. But bitcoin users aren’t attacking anyone; they are avoiding an attack. As the tax burden grows heavier, and surveillance intrudes more deeply, it’s reasonable for people to seek shelter. They just want to protect themselves.”

http://www.forbes.com/sites/realspin/2013/12/30/paul-krugman-is-wrong-bitcoin-isnt-evil-but-monetary-stimulus-is/

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Too Far Off Center

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“Take a look at this chart, which in my opinion is among the three or four most important charts of the year. The gray line quantifies the macroeconomic climate in 10 advanced economies, while the red line represents equity valuations in those economies.  Do you see it? Up until late 2011, the two lines moved in lockstep, as they logically should. After all, stock markets are a compilation of businesses, and businesses prosper when people prosper. So if the ‘real world’ is doing well, stocks should be too. And vice versa.  The departure from reality began in late 2011 and has accelerated since.”

http://www.caseyresearch.com/cdd/too-far-off-center

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Nobel Winner: “No Reason To Fear Deflation”

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“‘Historically, there is no reason to fear deflation,’ Nobel Laureate Thomas Sargent explains to Germany’s Wiwo.de, ‘we all benefit from lower prices.’ That central banks pursue an inflation rate of around 2%, Sargent blasts, is because they consider it their job to ‘make bad debt good debt,’ adding that inflation is ‘a major redistribution machine – reducing the real debt burden for the benefit of creditors and devaluing the assets of the creditors.’ A return to a gold standard,he concludes, to prevent governments and central banks from limitless money-printing ‘would not be foolish.'”

http://www.zerohedge.com/news/2013-11-16/nobel-winner-dares-go-there-no-reason-fear-deflation-greece-may-benefit-gold-standar

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Bill Bonner: Give Thanks to ‘The 1%’

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“Our friend is doing his part. The marble for his new countertops will be cut in Italy… making employment for stonecutters and shippers.  Carpenters will spend months knocking together frames and staircases.  Heating and air-conditioning specialists, architects, wallpaper salesmen, decorators, roofers, electricians, plumbers, surveyors…  We will raise a glass – or two – in honor of the spendthrifts who keep the wheels turning. And we give special thanks for that little subset of the 1% – those who sacrifice their own balance sheets for the benefit of the consumer economy.  Yes, they will be poorer – financially – but at least they will have nice houses to live in when the next crisis comes.”

http://www.bonnerandpartners.com/give-thanks-to-the-1/

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