Global Collapse
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Saudi oil well dries up

Saudi oil well dries up | Global Collapse | Scoop.it
If Citigroup is right, Saudi Arabia will cease to be an oil exporter by 2030, far sooner than previously thought.

 

Unexpected article in the Telegraph on how domestic consumption of oil in Saudi Arabia will hurt global energy supply-demand.


Via Willy De Backer
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Iran On The Brink Of Financial Collapse?

Iran On The Brink Of Financial Collapse? | Global Collapse | Scoop.it
A leaked classified intelligence report reveals that the government of Iran might not be able to pay the full salaries of its employees in the coming three months, which threatens the eruption of massive popular protests across the country.
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Drought 2012: A Food Price Catastrophe

Drought 2012: A Food Price Catastrophe | Global Collapse | Scoop.it
Droughts in the U.S. have forced the U.S. Agriculture Department to slash its forecast for the nation’s corn crops to only 10.8 billion bushels, the lowest amount since 2006 have U.N.
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Small Towns Grow Small Businesses

Small Towns Grow Small Businesses | Global Collapse | Scoop.it
Small business owners have been hit hard by the economic slowdown and when it comes to a helping hand, rural small business owners are often overlooked - but it doesn't need to be this way.
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A Cow Manure Shortage Too?

A Cow Manure Shortage Too? | Global Collapse | Scoop.it
The drought has caused a shortage of dried cow manure – or cow chips – for the Wisconsin State Cow Chip Throw this year in Prairie du Sac, Wisconsin...
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US Economy At Risk For 2013 Recession

US Economy At Risk For 2013 Recession | Global Collapse | Scoop.it

 

The latest data of durable goods orders, released Friday by the Commerce Department showed an increase of 4.2% for July but excluding transportation goods the order declined by 04%.

In addition orders for capital goods fell 3.4% over the same month while the June figure was revised down to 2.7%.

 

The latest data are not only very weak but are a sign of the weakest economic recovery since WWII according to several US economists and analysts. The decline in capital goods orders is a sign that US companies are hesitant to invest and expand their production capacity in light of global uncertainty.

 

China, Europe and Brazil, once thought as the economic drivers to set the tone of recovery after the end of the economic recession in the summer of 2009, are now struggling themselves to keep their growth at a steady pace.

 

We have seen large dips in economic growth in China to an annual rate of 8%, down from 11% during 2011, and continued fiscal and debt struggles in Europe which largely affect the US economic growth overall since both regions are crucial to the US production output and exports.

 

US exports to both regions have been stagnating since 2007 due to a slowing demand from Europe and China.

 

China in particular struggles with high inflationary pressures which lead the government to intervene through quantitative easing to ensure their economy does not overheat. That results in a net decline of production materials which in large part are imported from the US.

 

Europe on the other hand is still not out of the woodworks when it comes to curbing the budget shortfalls and the debt/GDP ratios of some members which puts extra pressure on Germany, France and The Netherlands to control their inflation for the benefit of euro stabilization.

 

The US economy continues to grow albeit at a very slow rate but should the durable goods orders continue to falter then the risk of a double-dip recession in 2013 is not unimaginable.

 

This scenario would result in the unemployment rate rising again to 9%, currently at 8.3%, when the expected budget cuts and tax increases take effect early 2013.

 

The Federal Reserve has yet to give a sign that it is willing to implement QE3 but given the latest data it is expected that the next FOMC (Federal Open Market Committee) may hint at a higher possibility of bond buy-back programs to curb long-term interest rates even further and to encourage business borrowing and spending to keep the US economy for retracting any further.

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Hedge Funds Betting On Collapse

Hedge Funds Betting On Collapse | Global Collapse | Scoop.it

Hedge funds are betting on a disaster hitting the financial markets within the next several quarters, with managers holding onto historic levels of cash.

 

That so-called dry powder gives them the cash they need to quickly jump in if markets sell off, according to numerous hedge fund managers and industry consultants.

 

”Most hedge funds I see are carrying lower market exposure than I’ve seen in some time,” said Brad Balter, founder of investment advisory firm Balter Capital Management. “This is not to say they are net short. They simply want to conserve their buying power and be ready for major opportunity sets that may arise.”Many are anticipating that Europe’s debt crisis, the U.S. fiscal cliff, or the slowdown in China will cause a 2008-like reaction around the globe, when stocks swiftly sold off in the wake of the financial crisis.

 

But betting on a downturn in this environment is a risky play.

 

The latest Fed minutes showed central bankers leaning toward more stimulus. Should Fed chairman Ben Bernanke suggest another round of bond buying next week in Jackson Hole, Wyo., stocks could swiftly move higher. On top of that, Greece is still in limbo and talk of the European Central Bank intervening in the bond market makes predictions about an end-game for Europe nearly impossible.

 

"I have not seen the level of uncertainty this high for a long long time," said Komal Sri-Kumar, chief global strategist at TCW . "If you were a hedge fund and you didn't know when the correction would come but were concerned, it would makes sense to keep cash available."


Because of this defensive posture, hedge funds have missed out on the 2012 stock rally. The S&P 500 (SPX) has gained 11% through July 31, while Morningstar's hedge fund index of nearly 1,000 funds gained just 3.7%.

 

"They could've picked stocks poorly, but with these returns, it looks more like they're not even close to being fully invested in the market," said Nadia Papagiannis, Morningstar's director of alternate fund research.

 

The SEC only requires hedge funds to disclose stocks they own, and not how much cash they're holding or what stocks they're betting against.


Holding onto cash is actually one of the boldest moves a hedge fund can make. Hedge fund managers get a 2% fee for all the money they manage, so investors quickly grow irritated with managers who sit and wait. "It's a natural reaction to say why am I paying you to hold cash," said Daniel Celeghin, partner at hedge fund consulting firm Casey, Quirk & Associates.

 

Some funds have outperformed the S&P. Among them: Tiger Global Management, which focused on technology stocks and counts Apple as its top holding, is up more than 20% as of July 31, according to a source with knowledge of the fund's returns. And the flagship hedge fund at Citadel run by billionaire Ken Griffin is up 11.5% through July 31, according to sources familiar with its returns.

Hedge funds betting on the mortgage market and those focused on financials have also scored big in 2012. Bay Pond Partners, owned by asset manager Wellington Partners, is up 11%, largely through its investments in bank stocks, said two sources. Two key funds at SPM, a $3.4 billion fund focused on residential mortgages, are up 13.4% and 11.3% respectively. Another mortgage focused hedge fund, Metacapital, is up 25% through July.

 

Despite the industry's overall recent poor performance, investors haven't shied away. In the first quarter of 2012, the hedge fund industry held a record $2.13 trillion of assets, according to Hedge Fund Research. During the second quarter, investors pulled back slightly, leaving them with $2.10 trillion.

 

Since the financial crisis, investors have been drawn to hedge funds because they have the ability to bet on all types of markets and don't simply expect stocks to move up. "The thought now is that I need to have at least some of my capital with managers who have the flexibility and skill set to take advantage of unpredictable sideways markets," said Casey, Quirk & Associates' Celeghin.

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Small Town Money: Interest Rate For The "Rest Of US": 400%

When your local friendly Too-Big-To-Fail bank needs a 'helping hand' loan to get through pay-day or buy some extra S&P futures, it picks up the shiny red phone and asks Ben for unlimited access to free money. When the 'rest of us' need a little extra - to get through the next week before our pay-check hits, we call this guy - who charges a 400% APR. The Central Bank Discount Window - Priceless.

 

What is perhaps most notable that no matter how much the CNBC anchors tried to corner this gentleman into admitting his vig is a little rich, the bottom line is that his services are in demand, and by a customer that has a far higher annual household income that we would have expected... once again the 'middle-class' is hurting to maintain any standard of living.

 

Video: http://goo.gl/Efq1W

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False Unemployment Numbers

False Unemployment Numbers | Global Collapse | Scoop.it

The US Labor Department declared that the unemployment rate has dropped to 8.2 percent. While economists applaud the latest news, the reality is improvement comes only after 3 million jobless Americans are unaccounted for.

 

While job creation exceeded expectations for January, those experiencing long-term unemployment — those jobless for longer than six months, that is — remains at a record high.

 

In a new report from the Pew Charitable Trusts, it’s revealed that those suffering the longest from the unemployment epidemic exceed any monthly statistic dating back to the World War II. The Labor Department figures that 5.5 million would-be workers have been without employment for 27 weeks or longer, accounting for around 42.9 percent of the total tally of unemployed Americans.

 

The consulting firm Hamilton Place Strategies based out of Washington estimates that as many as 3 million additional unemployed workers have been without jobs for just as long but are not taken into consideration by the US government. For those, the Department of Labor simply stops counting them.

 

The government has also identified around 2.8 million Americans “marginally attached” to the job market in January. Per their own definition, that accounts for those who want to work and have looked for working during the last year but have not concentrated their efforts on the job hunt during the last month.

 

They are also not accounted for in the Labor Department’s unemployment figure.

 

Speaking before the US House of Representatives Committee on the Budget, Federal Reserve Chairman Ben Bernanke addressed the issue. He admitted that the US economy “has been gradually recovering from the recent deep recession,” but called long-term unemployment figures still “particularly troubling.”

 

“More than 40 percent of the unemployed have been jobless for more than six months, roughly double the fraction during the economic expansion of the previous decade,” explained Bernanke. “We still have a long way to go before the labor market can be said to be operating normally.”

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Prepare For The Coming Economic Collapse

Prepare For The Coming Economic Collapse | Global Collapse | Scoop.it
One of the biggest flaws in our financial system is with the Federal Reserve system itself. The U.S. government is 16 trillion dollars in debt is because the system is designed to create gigantic amounts of government debt.
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Small Town Money: Bank Heads Roll Over Libor Scandal

Small Town Money: Bank Heads Roll Over Libor Scandal | Global Collapse | Scoop.it
Two senior Barclays staff, a director and a top trader, have left the bank’s US offices in the wake of the Libor scandal that has shaken the bank to its foundations.
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Small Town Money: Small-town Magic Disappears

Small Town Money: Small-town Magic Disappears | Global Collapse | Scoop.it
The magic of the small town was once so American with common sense values and communities built on a shared purpose. Sadly, it's all but disappeared in many rural areas.
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Economic Collapse Will Happen No Matter Who Wins Election

The big banks and the Federal Reserve are gigantic Ponzi schemes. The Fed cannot keep interest rates low indefinitely, and when the interest rates go up, the party will be over.
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Small Town Money: Gov't Explains 750 Million Rounds of Ammunition

Small Town Money: Gov't Explains 750 Million Rounds of Ammunition | Global Collapse | Scoop.it
This is enough ammunition to empty five rounds into the body of every living American citizen. What’s the plan that requires so many dead Americans?

 

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The Dollar Will Collapse

The Dollar Will Collapse | Global Collapse | Scoop.it

The dollar and the U.S. bond market are headed for a collapse as the U.S. Federal Reserve loses the ability to service the nation’s debt with “artificially low” interest rates.

 

As far as I am concerned, U.S. Treasurys are junk bonds. And the only reason that the U.S. government can pay the interest on the debt, and I say ‘pay’ in quotes because we never pay our bills. We borrow the money so we pretend to pay, but the only reason we can do it is because the Fed has got interest rates so artificially low.”

 

The Fed has been keeping rates on benchmark 10-year Treasurys low by purchasing bonds via quantitative easing (QE), and this will ultimately be the U.S. economy’s undoing. Unfortunately, we are going to get more QE than Rocky movies, because the only thing keeping this phony economy going is this QE. And the minute you take it away, it’s going to collapse.

 

Fed officials warned that the U.S. could be heading for a “fiscal cliff” at the end of the year if mandated tax increases and spending cuts are implemented. On the same day, fund manager Bill Gross, who runs the world’s biggest bond fund, told CNBC that the U.S. will face a downgrade of its triple-A debt rating if it did not fix its fiscal situation.

 

"It’s not just $15 trillion in terms of current debt,” Gross said. “It’s probably three to four times that in terms of Medicare, Medicaid, of Social Security, in terms of the present value.”

 

“So unless the U.S. begins to make some inroads, and that’s called the structural deficit that the (Congressional Budget Office) and the (International Monetary Fund) basically identified as perhaps six to seven to eight percent, greater than any country other than Japan and the U.K. Until we address that structural deficit, then yes, we're headed to double-A territory,” he said.

 

Euro Pacific’s Schiff predicts weakness in the U.S. dollar, which will put pressure on commodity prices and fuel inflation. This will in turn force the Fed to raise interest rates, he added.

 

“The Fed will not do it; the Fed knows the only thing propping up our phony economy is zero percent interest rates and quantitative easing. And I think when the market figures this out, it’s going to put even more pressure on the dollar,” he said.

 

Schiff is a well-known bear who predicted in 2008 that the dollar will collapse amid hyperinflation. That did not happen, and the dollar strengthened against most major currencies by the end of 2009.

 

Andrew Economos, managing director and head of sovereign and institutional strategy at JPMorgan Asset Management, said what the Fed is trying to do is “buy time” by keeping credit cheap and encouraging banks to lend.

 

So far it's not working.

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Hedge Fund's Record Bet Against Euro

Hedge Fund's Record Bet Against Euro | Global Collapse | Scoop.it

Hedge funds are taking increasingly larger bets against the euro, as the debt crisis in Europe continues to heat up.

 

A record number of hedge funds made so-called short bets, or wagers that the euro would weaken, according to the latest report from the Commodities Future Trading Commission that tallied the data for the week ended May 29.

 

Citigroup's foreign exchange analysts said hedge funds spent nearly $36 billion betting against the euro during that week. Only $11.8 billion went toward bets on a stronger euro.

 

The euro is down 7% from April, currently trading around $1.24.

The euro will most likely continue to trend lower, but most experts don't expect a free fall. "It will drip lower [but] there will be no overnight collapse," said Douglas Borthwick, head of trading at currency trading firm Faros Trading.


Hedge funds and other investors are capping their bets on the euro's decline because they could get burned if European leaders intervene, according to analysts and traders.

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The Unemployed Generation?

The Unemployed Generation? | Global Collapse | Scoop.it

Young America is struggling to find work. After getting out of college and college debt has officially surpassed credit card debt in the US.

Young workers are on the bottom of the ladder, are less likely to be employed than at any time since World War II.

 

The government data details that 41 percent of Americans believe young adults of the nation have felt the impact of the economy more than any other demographic.

 

On the other hand 29 percent say middle-aged Americans have been hit the hardest and 24 percent believe senior citizens 65 and older have felt the worst of the effects.

 

Many blame the government data that illustrates record gaps in employment between young and older employees in the job market.

The analysis also revealed that 69 percent of those surveyed think younger adults are having a tougher time than the previous generation to pay for higher education, find employment, purchase property or even save for the future. But not all young Americans are struggling to make ends meet.

 

One third of the 18 to 34 demographic rate their financial status as exceptional, but for the rest employers have taken advantage of these trying times by cutting wages for entry-level positions as opposed to reducing the pay of more skilled employees.

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