US Economy; Complete disconnect between Wall Street and Main Street - by RM

Question, who or what is behind the major disconnect between Wall Street and reality, with stocks going up on the Dow for the past 4 days.Today by even more than 500 points, and this while economies are tanking all around the world, and while as many as 30% of the US workforce remains 
unemployed ?

Some companies obviously are making excessive profits as a result of the present emergency situation, but in no way is Wall Street a reflection of the state of the US economy, as President Trump likes to brag about.

The above is, however another clear indication of the great disparity between "the have and have nots" in the US and has to be remedied by an aggressive and progressive new Democratic government, before it destroys the USA from within.

EU-Digest

China-US relations: Arrest Meng Wanzhou, executive of Huawei, not favorable to improving relations China - US

Huawei arrest: China demands release of Meng Wanzho

Note EU-Digest: Meng Wanzhou was arrested in Canada at the request of the US, who wants her extradited to US because of business dealings Huawei has with Iran. For those who might have forgotten - the US (Trump Administration) unilattery broke off relations with Iran, when the Trump Administration pulled out of the International Nuclear Agreement, signed between Iran and many other nations around the world, including the EU and the US. Hopefully Canada (Trudeau) will show some "backbone", by not extraditing her to the US, specially since all the other co-signers of the International Nuclear Agreement, including the EU and Canada, are still respecting the agreement with Iran.

 

Read more at 

http://www.bbc.co.uk/news/business-46465768

US ECONOMY: COULD RECORD US DEFICIT TRIGGER THE NEXT RECESSION: ? "As U.S. trade gap widens to unimaginable hights."

The U.S. trade deficit rose to a seven-month high in September as imports surged to a record high amid strong domestic demand, offsetting a rebound in exports.

The Commerce Department said on Friday the trade gap increased 1.3 percent to $54.0 billion, widening for a fourth straight month. Data for August was revised to show the trade deficit rising to $53.3 billion instead of the previously reported $53.2 billion.

Could the US Economy collapse?

But here's the bigger question that retail investors and Wall Street are currently asking: Is the current stock market correction over? Given the many headwinds facing stocks and the U.S. and/or global economy, the answer may not be what investors want to hear.

Here are 25 reasons and/or scenarios that could cause the stock market to head substantially lower than where it's currently valued.

1. The ongoing trade war with China escalates, raising material costs, curbing consumer spending, and hurting corporate profits.
2. Corporate share buybacks fail to boost per-share profits as much as expected.
3. Democrats win one or both houses of Congress, hurting the chance of Republicans to pass further fiscal stimulus legislation.
4. The federal budget deficit continues to soar, placing added emphasis on our growing national debt, currently at more than $21 trillion.
5. The U.S. dollar keeps strengthening, placing pressure on exports and worsening the U.S. trade deficit with foreign countries.
6. FANG stocks – that's Facebook, Amazon.com, Netflix, and Google (now Alphabet) -- continue to draw the ire of short-sellers.
7. The Federal Reserve gets overly aggressive with interest rate hikes, sapping lending demand.
8. The yield curve flattens, reducing the desire of banks to lend money.
9. Interest rates rise, providing incentive for investors to ditch volatile equities for the safety of bonds and bank CDs.
10. Britain falls into a "hard Brexit." With few or no trade deals in place, the U.K. falls into recession, taking the U.S. and other developed countries with it.
11. China's economy experiences its slowest growth in decades, placing pressure on its ability to import from the U.S. and other key players.
12. The U.S. housing market shows signs of weakening, with important markets like California seeing a steep drop-off in new home sales.
13. Credit-card delinquencies begin to trickle higher, demonstrating the inability of consumers to meet their payment obligations.
14. The subprime auto loan market bubble bursts.
15. The U.S. goes to war, regardless of the reason or the country in question.
16. An errant tweet from President Trump stirs Wall Street and investors.
17. A flash crash caused by computer algorithms results in substantially reduced liquidity and perpetuates a rapid move lower in the stock market.
18. Investor emotions (especially those of day traders) get out of hand and send traders running for the exit.
19. The unemployment rate, which is at a 49-year low, begins to rise, signaling peak employment and the possibility of a weakening economy.
20. Disruption in important oil-producing countries causes crude prices to skyrocket or plunge. Either way, it could create sticker shock or job losses and adversely impact the U.S. economy.
21. U.S. GDP data shows slowing growth, which, in turn, cools investor expectations for stocks, sending them lower.
22. Inflation comes in far lower than expected, signaling that businesses have little pricing power. The prospect of deflation could wreak havoc on corporate earnings, causing the market to fall.
23. The U.S. debt ceiling is hit (yet again), but the political divide in Congress becomes too great for lawmakers to overcome, allowing the shutdown to perpetuate for months.
24. European debt crisis 2.0 hits, with countries like Italy unable to dig their way out of years of loose borrowing.
25. A widely followed pundit, such as Warren Buffett, sounds the cry of the stock market being overvalued.

In other words, there is no shortage of reasons the stock market could tumble from its recent all-time highs.

Bottom-line, however -it does not look good for the US Economy as the deficit is coming close to a trillion US dollars.Impossible to pay it back, unless by slashing government spending, and increasing taxes.

Unlike the trillion dollar budget deficits that occurred during the Obama administration that were temporary and largely the result of the Great Recession, the Trump deficits that will soon reach and exceed $1 trillion are permanent and will only get worse in the years ahead.

The Trump deficits are the result of changes in federal spending and revenue that will continue to be in place until some president and Congress decide to reverse them, that is, to increase taxes and make cuts to popular programs.

EU-Digest

US Economy: might look good based on Wall Street figures, but certainly not good for "Joe Bloke" and the "Have Not"s

US economy might look good, but reports show collectively, Americans have more than $1 trillion in credit-card debt, according to the Federal Reserve.

They have another $1.5 trillion in student loans, up from $1.1 trillion in 2013. Motor vehicle loans are now topping $1.1 trillion, up from $878.5 billion in 2013. And they have another nearly $15 trillion in mortgage debt outstanding.

EU-Digest

Banking Industry: still free wheeling

The book:The U.S." Government and the Major Banks:Justice for Sale at the Bazaar-By Frank Vogl "

notes:

"To date, not a single top banker has been put on trial, let alone sent to prison, for the frauds perpetrated by the institutions they lead".

Obviously the question is Who is kidding whom ?-  

Bottom-Line: Hanky - Panky Capitalism still alive and well.

EU-DIGEST

US Economy: Re-Energized Dollar Looms Over the Rest of the World - by Ira Iosebashvili

On Wall Street, the rising dollar has been one of the most visible signals of growing optimism in the U.S. economy. For many other countries, it spells trouble.

Most analysts expect the U.S. currency to strengthen in 2017, extending a gain  that has boosted the value of US Dollarby more than one third since the US credit downgrade in 2011.

Note EU-Digest: the strength of the US economy could also be a Wall Street Fata Morgana created by Wall Street and the corporate controlled press - time will tell.

Read more: Re-Energized Dollar Looms Over the Rest of the World - WSJ

Trade Agreements: Even Mainstream Economists Starting to Admit that "Free Trade Agreements" Are Anything But ..- by Robert Reich

Trump and Sanders have whipped up a lot of popular support by opposing “free trade” agreements during the US Presidential debates.

But it’s not just politics and populism … mainstream experts are starting to reconsider their blind adherence to the dogma that more globalization and bigger free trade agreement are always good.

UC Berkeley Economics professor Robert Reich – Bill Clinton’s Secretary of Labor – wrote last month:

    "Suppose that by enacting a particular law we’d increase the U.S. Gross Domestic Product. But almost all that growth would go to the richest 1 percent.

    The rest of us could buy some products cheaper than before. But those gains would be offset by losses of jobs and wages.
   
This is pretty much what “free trade” has brought us over the last two decades.
   
    I used to believe in trade agreements. That was before the wages of most Americans stagnated and a relative few at the top captured just about all the economic gains.  Recent trade agreements have been wins for big corporations and Wall Street, along with their executives and major shareholders

    But those deals haven’t been wins for most Americans. The fact is, trade agreements are no longer really about trade.

Indeed, while it’s falsely called a “trade agreement”, only 5 out of 29 of the Trans Pacific Partnership’s chapters have anything to do with trade.  And conservatives point out that even the 5 chapters on trade do not promote free trade."

Reich continues: "Worldwide tariffs are already low. Big American corporations no longer make many products in the United States for export abroad.

    Google, Apple, Uber, Facebook, Walmart, McDonalds, Microsoft, and Pfizer, for example, are making huge profits all over the world. but those profits don’t depend on American labor – apart from a tiny group of managers, designers, and researchers in the U.S.

     To the extent big American-based corporations any longer make stuff for export, they make most of it abroad and then export it from there, for sale all over the world – including for sale back here in the United States.

    The Apple iPhone is assembled in China from components made in Japan, Singapore, and a half-dozen other locales. The only things coming from the U.S. are designs and instructions from a handful of engineers and managers in California.

     Apple even stows most of its profits outside the U.S. so it doesn’t have to pay American taxes on them.

     This is why big American companies are less interested than they once were in opening other countries to goods exported from the United States and made by American workers.

     They’re more interested in making sure other countries don’t run off with their patented designs and trademarks. Or restrict where they can put and shift their profits.

     In fact, today’s “trade agreements” should really be called “global corporate agreements” because they’re mostly about protecting the assets and profits of these global corporations rather than increasing American jobs and wages. The deals don’t even guard against currency manipulation by other nations.

     According to Economic Policy Institute, the North American Free Trade Act cost U.S. workers almost 700,000 jobs, thereby pushing down American wages.

     Since the passage of the Korea–U.S. Free Trade Agreement, America’s trade deficit with Korea has grown more than 80 percent, equivalent to a loss of more than 70,000 additional U.S. jobs.

     The U.S. goods trade deficit with China increased $23.9 billion last year, to $342.6 billion. Again, the ultimate result has been to keep U.S. wages down.

     The old-style trade agreements of the 1960s and 1970s increased worldwide demand for products made by American workers, and thereby helped push up American wages.

     The new-style global corporate agreements mainly enhance corporate and financial profits, and push down wages.

     Global deals like the Trans Pacific Partnership or the TTIP with Europe will boost the profits of Wall Street and big multi-national corporations, and make the richest 1 percent even richer."

Bottom- line - but they are not beneficial for the citizens of the countries which have signed these treaties. 

Read more: Even Mainstream Economists Starting to Admit that "Free Trade Agreements" Are Anything But ... | Zero Hedge

Europe's Future Is Federal - by Jean Tirole

Numerous Europeans view Europe as a one-way street: they appreciate its advantages but are little inclined to accept common rules. An increasing number throughout the Union are handing their vote to populist parties – Front National, Syriza, Podemos – that surf on this Eurosceptic wave and rise up against “foreign”- imported constraints.

Embroiled with the Greek crisis, European policymakers will soon have to step back and reflect on the broader issue of the Eurozone’s future. Before envisaging an exit or, on the contrary, more sustained integration, it’s right to reflect upon the consequences of each option.

Oversimplifying, there are three strategies for the Eurozone: a minimalist approach that would see a return to national currencies, while keeping Europe perhaps as a free trade area and retaining a few institutions that have made a real difference such as common competition laws; the current approach based on the Maastricht Treaty of 1992 and its fiscal compact update in 2012; and, finally, the more ambitious version of federalism. My own clear preference is for the federalist version but I’m not at all convinced that Europeans are ready to make it work successfully.

Note EU-Digest:  Federalism is probably the only way to go if Europe does not want to become subservient to the presently ruling superpowers, China, the US, and even Russia. Populism and nationalism is not the way to go, as it has always turned sour in Europe's history. True federalism would certainly require finding another historic shining political star like Mustafa Kemal Ataturk, who has the ability to get the EU reorganized, and all the EU member states moving in the same direction. Let's hope we get blessed soon in finding that "needle in the political haystack" to rescue the EU out of the iron grip of the Wall Steet dominated financial community.

Read more: Europe's Future Is Federal » Social Europe

Greece says NO to austerity demands by Wall Street dominated financial sector and their IMF brainchild

The Greek No Vote has shown the rest of the EU that democracy is what counts and not the dictatorial rule of the Wall Street dominated global financial markets and its brainchild the IMF.

It will hopefully only hasten Europe's need to take a more independent route on a variety of issues, presently controlled by Trans-Atlantic financial and political forces.

Europe must choose for Greece, after all, aren't they one of us?
EU-Digest

Financial Community: International Lawsuits Begin to Build Momentum Against Wall Street Thugs

The Argentinian government has filed a lawsuit against Wall Street firm CitiGroup over debt repayments that Argentine officials say violate national laws, reported The Guardian.

Part of the lawsuit states that the country seeks to file criminal charges against employees of the Argentinian arm of CitiGroup. The bank said in a filing with the Securities and Exchange Commission that Argentine officials had “taken certain adverse actions against Citi Argentina, including filing a lawsuit against Citi Argentina and instituting a suspension of certain activities.”

Because of this bad debt deal, the Argentine government wants not only to file charges against CitiGroup employees, but implement sanctions that bar any future operations within the country. This dispute between Argentina and CitiGroup comes during friction between the country and two other financial institutions, NML Capital and Aurelius Capital Management.

The two institutions did not accept a deal to restructure Argentina’s national debt. Argentina apparently owes a “holdout” debt of $1.3 billion to the two hedge funds, and U.S. judge Thomas Griesa ruled that it must pay that amount before receiving a restructuring deal.

Because Argentina senses a banking scam run by CitiGroup and accuses Griesa of being a banking crony, the country has ignored the judge’s ruling and blocked Citi’s capital market operations and suspended the leader of Citi’s Argentine operations, Gabriel Ribisich — who has been accused of misconduct.

The BBC recently reported that CitiGroup may plead guilty to accusations of manipulating exchange rates in foreign currency markets. Wall Street and Griesa’s cronyism have backed Argentina in a tough spot. Unrealistic expectations and international bullying pushed the country into default as Argentina is refusing to pay the hedge funds, NML and Aurelius.

Read more: International Lawsuits Begin to Build Momentum Against Wall Street Thugs

Greece: Greek radical-left leader vows to end Wall Street imposed 'humiliation and pain'

Greek leftist leader Alexis Tsipras promised on Sunday that five years of austerity, “humiliation and pain” imposed by international creditors were over after his Syriza party swept to victory in a snap election on Sunday.

Read more: Europe - Greek radical-left leader vows to end 'humiliation and pain' - France 24

Global Economy: European economic figures far more accurate than those from the US - by RM

Transparency key to success Atlantic Alliance

When listening to or reading US financial reports there are some remarkably disturbing facts popping up.

One of these is the fact that it was actually the US which caused the 2007/2008 financial crash but this has been completely swept under the mat by the US.

Keep in mind though that all the media outlets in the US, except very few, which are "not for profit organizations" (who mainly get their income from public/private donations and grants) are mostly profit based multi-national corporations. This should immediately raise a red flag as to the impartiality and balance of the news/financial reports they release.

Possibly, this is also the reason that at the same time there is this constant barrage of attacks coming from those same US media circles bashing and critizicing the EU/ECB for not adopting the US QE financial policies (printing more money and pumping this" monopoly money" into the marketplace) in order to get the EU economy going again.

As to the US QE policies,  many economists believe this could eventually be a recipe for future US economic disaster.

Also, looking at some of the official figures put out by the US Government and reading between the lines, the attentive reader will quickly find a lot of nebulous statistics on a variety of issues and items, including employment, trade, debt, infrastructure, military and security expenditures.

In this volatile scenario Wall Street is a special "Chapter" by itself.  Some critics call Wall Street a financial "fairyland" where words and phrases as versatility, headwinds, optimize, boldness, performance, choices, transparency, bubbles, wealth, growth, state of the art, profitable, opportunity are used in different ways as shares go up and down and traders turn out the big winners in dividing up the spoils.

Obviously without any doubt there are also "forces" in Europe ( Britain) who are following and would love to have the EU adapt this "flawed" US financial model.

Fortunately, and maybe unfortunately for some,  the EU is a Union of 28 countries with 28 central banks.  Of these 28 countries 18 belong to the so called European Economic Zone (Eurozone) that have adopted the euro (€) as their common currency.and sole legal tender.

The ECB is the central bank for the euro and administers monetary policy for the whole Eurozone.

Any report or statistic on or about the state of the EU economy issued by the ECB  is scrutinized very carefully by all 18 members of the ECB before they become public.Canada which is a Federated country also applies similar rules.

Official EU financial reports and statement are therefore without any doubt far  more accurate and reliable than those coming from US government agencies.

Isn't it time for the EU to get to the point with our friends across the other side of the pond on this issue? And what better venue to do it than during the ongoing EU-US trade negotiations?

EU-Digest

Global Economy: Debt risk, market turmoil threaten financial crisis - David Parkinson

Nagging debt risks, heated currency wars and renewed market turmoil are making the global economy a precarious place, six years after the financial crisis.

On the sixth anniversary of the S&P 500’s biggest one-day drop in history – a 106-point plunge on Sept. 29, 2008, that marked the beginning of one of the worst market collapses of all time – the respected annual Geneva Report on the World Economy is raising concerns about a “poisonous combination” of record and still-rising global debts and chronically slow growth. It warned that this leaves the world exposed to a heightened risk of further economic stagnation and even another potential financial crisis.

Read more: Debt risk, market turmoil threaten financial crisis - The Globe and Mail

Global Economy: Yes, the stock market is rigged - by Timothy Noah

An entertaining CNBC clip currently rocketing through social media networks shows William O’Brien, president of BATS Global Markets, having conniptions over Michael Lewis’s claim (in his new book, Flash Boys) that the markets are rigged. Now that O’Brien has finished reading Lewis’s book, I recommend that he pick up David W. Maurer’s 1940 classic, The Big Con.

The Big Con (not to be confused with a 2007 book with the same title by journalist Jonathan Chait) is an affectionate catalog of the elaborate confidence games played during the golden age of the grift – a period that began in the late 19th century and ended with the Great Depression. In the book, Maurer describes a big con called “the wire” that will be familiar to anyone who’s ever watched the 1973 movie The Sting (which drew heavily on Maurer’s research):

It was a racing swindle in which the con men convinced the victim that with the connivance of a corrupt Western Union official they could delay the race results long enough for him to place a bet after the race had been run, but before the bookmakers received the results.

In essence, the mark was invited to profit by receiving, illegally, information a few minutes before it was available to anyone else. (What the victim didn’t know was that the Western union office and the gambling den were both fakes.) This is, more or less, what Wall Street’s high-frequency traders and the proliferating exchanges that serve them do: they manipulate the speed at which market information travels so that a lucky few can benefit financially from privileged early access at the expense of everybody else.

They do this not by slowing down the rate at which the information travels, but by speeding it up. In this instance, the acquisition of privileged information is perfectly legal. Also, the privileged access is real, making the dupe not the trader who seeks it but anybody who lacks it.

The rap against Lewis’s book is that he exaggerates the degree to which any of this affects the ordinary investor. And it’s true that any lone day trader who logs onto his E*Trade account expecting to outperform the big institutional investors should have his head examined. But Lewis makes clear in Flash Boys that it took many very intelligent bankers (and consequently many investors) several years to figure out why their computer terminals went blooey when they attempted futures trades. Prices were changing in mid-transaction, seemingly in response to orders they were still keying in. If that isn’t a rigged market, what is?

Lewis’s book describes an insane competition to provide the shortest fiber-optic link to market information (and therefore shave off a few crucial millionths of a second). The process leads to, among other travesties, the drilling of dedicated tunnels through mountains and under rivers in rural Pennsylvania. In Lewis’s view, this arms race can’t be regulated away. His book’s hero, Brad Katsuyama, fights it by creating a new exchange, IEX Group, that slows down all trades sufficiently to put all buyers and sellers on a level playing field.

Perhaps Lewis is right that the market is better-positioned than the government to solve this particular problem, in which case good luck to Katsuyama and anyone who might set up a similarly un-rigged shop. The advent of a market-based “slow investment” movement comparable to the “slow food” movement advocated by Berkeley restaurateur Alice Waters and writer Michael Pollan would certainly be welcome. (Something like it seems to have worked out pretty well for Warren Buffett.)

But Flash Boys, along with Lewis’s previous The Big Short, conveys a larger message that the financial markets, with their “dark pools” and ever-more-abstruse financial instruments, are rapidly losing the transparency necessary for them to work properly – a problem the 2010 Dodd-Frank financial reform legislation only partially addresses. As enthralling as Lewis’s new narrative is, his message that the markets are rigged won’t surprise anyone (except, apparently, the enraged William O’Brien). Financial regulators’ foremost task right now is to drag American finance into the sunlight in every way that it can.

That Wall Street will fight them every step of the way merely confirms how rigged the game really is.

Read more: Yes, the stock market is rigged | MSNBC