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U.S. Economic Confidence Surges To The Highest Level That Gallup Has Ever Recorded

donald-trump-accepts-the-nomination-public-domainGallup’s U.S. Economic Confidence Index has never been higher than it is today.  The “Trumphoria” that has gripped the nation ever since Donald Trump’s miraculous victory on election night shows no signs of letting up.  Tens of millions of Americans that were deeply troubled by Barack Obama’s policies over the last eight years are feeling optimistic about the future for the first time in a very long time.  And it is hard to blame them, because what we have already seen happen since November 8th is nothing short of extraordinary.  The stock market keeps hitting record high after record high, the U.S. dollar is now the strongest that it has been in 14 years, and CEOs are personally promising Trump that they will bring jobs back to the United States.  These are things worth getting excited about, and so it makes perfect sense that Gallup’s U.S. Economic Confidence Index has now risen to the highest level that Gallup has ever seen

Americans’ confidence in the economy continues to gradually strengthen after last month’s post-election surge. Gallup’s U.S. Economic Confidence Index averaged +10 for the week ending Dec. 18, marking another new high in its nine-year trend.

The latest figure is up slightly from the index’s previous high of +8 recorded in both of the prior two weeks. The first positive double-digit index score since the inception of Gallup Daily tracking in 2008 reflects a stark change in Americans’ confidence in the U.S. economy from the negative views they expressed in most weeks over the past nine years.

And of course this booming level of confidence is not just reflected in Gallup’s numbers.  As I discussed in a previous article, the mammoth shift in the results of CNBC’s All-America Economic Survey after the election was nothing short of historic…

The CNBC All-America Economic Survey for the fourth quarter found that the percentage of Americans who believe the economy will get better in the next year jumped an unprecedented 17 points to 42 percent, compared with before the election. It’s the highest level since President Barack Obama was first elected in 2008.

The surge was powered by Republicans and independents reversing their outlooks. Republicans swung from deeply pessimistic, with just 15 percent saying the economy would improve in the next year, to strongly optimistic, with 74 percent believing in an economic upswing. Optimism among independents doubled but it fell by more than half for Democrats. Just 16 percent think the economy will improve.

On Tuesday, the Dow Jones Industrial Average closed at yet another all-time record high.

That was the 17th record close since election day, and overall the Dow is up a whopping 8 percent during that time span.

I don’t think that we have ever seen an extended post-election stock market rally quite like this one, and the U.S. dollar is rallying too.  On Tuesday, the U.S. dollar was the strongest that it has been in 14 years

The dollar hit a fresh 14-year high on Tuesday, boosted by upbeat comments from Federal Reserve Chair Janet Yellen that kept alive market expectations for swifter U.S. interest rate hikes next year than had been expected.

The greenback climbed broadly but its gains were strongest against the yen, which slid as much as 1 percent after the Bank of Japan kept monetary policy unchanged.

But of course not everything is rainbows and unicorns.  Signs of trouble continue to erupt all over the U.S. economy, and there are many that believe that Trump will be facing some very serious economic concerns very early in his presidency.

Just look at what is happening in the auto industry.  Unsold vehicles are piling up at an alarming pace at dealers all over the nation, and GM just announced that it is going to temporarily close five factories

GM has been reacting to its fabulously ballooning inventory glut by piling incentives on its vehicles. But that hasn’t worked all that well though it cost a lot of money. Now it’s time to get serious.

It will temporarily close five assembly plants in January and lay off over 10,000 employees, spokeswoman Dayna Hart said today.

And GM is definitely not alone.  Back in October, Ford made a similar announcement

In October, Ford announced that it would temporarily shut down production at one of its F-150 assembly plants (Kansas City), along with production at a plant that assembles the Escape and the Lincoln MKC (Louisville), plus two plants in Mexico. It would also lay off about 13,000 workers, 9,000 in the US and 4,000 in Mexico.

Another signal that the economy is slowing down is the tremendous difficulty that Uber is experiencing right now.  If you can believe it, they just announced that they lost a staggering 800 million dollars in the third quarter

Uber racked up pro-forma losses of more than $800m in the third quarter of this year as a price war with rival ride-hailing service Lyft in the US and heavy spending on new initiatives weighed on its figures, according to a person familiar with its recent financial performance, reports The Financial Times.

The third-quarter figures, first reported by tech news site The Information, show that Uber still faces steep losses even after pulling back from China.

I don’t understand how Uber could possibly lose 800 million dollars in three months.  Something is definitely very wrong over there.

Personally, I hope that things go as well as possible during the Trump administration.  If we truly are entering a new golden era of peace and prosperity, that would be more than okay with me.

But we should not forget that our economic fundamentals have continued to deteriorate all throughout the Obama years, and our nation has been steadily accumulating the largest mountain of debt the world has ever seen.

Unless there is some sort of unprecedented miracle, there is no way that this giant bubble that we are in at the moment is going to end well.  So it is definitely good to be optimistic, but we also need to be realistic about where we are right now and about the great challenges that we will soon be facing.

The American People Are Utterly Clueless About What Is Going To Happen As We Enter 2015

Wrong Way - Public DomainThe American people are feeling really good right about now.  For example, Gallup’s economic confidence index has hit the highest level that we have seen since the last recession.  In addition, nearly half of all Americans believe that 2015 will be a better year than 2014 was, and only about 10 percent believe that it will be a worse year.  And a lot of people are generally feeling quite good about the people that have been leading our nation.  According to Gallup, once again this year Hillary Clinton is the most admired woman in America and Barack Obama is the most admired man in America.  I don’t know what that says about our nation, but it can’t be good.  Unfortunately, when things seem to be going well common sense tends to go out the window.  A couple days ago, the Guardian ran an article entitled “Goodbye to one of the best years in history“, and a whole lot of people out there are feeling really optimistic these days.  But should they be?

Sadly, what we are experiencing right now is so similar to what we witnessed in 2007 and early 2008.  The stock market had been on a great run, people were flipping houses like crazy and most people were convinced that the party would never end.

But then it did end – very painfully.

The signs of trouble were there, but most people chose to ignore them.

Sadly, the exact same thing is happening again.

On Monday, the price of oil hit a brand new five year low.  As I write this, U.S. oil is sitting at a price of $53.76 a barrel, which is nearly a 50 percent decline from the peak earlier this year.

There is only one other time in history when the price of oil has declined by more than 50 dollars a barrel in such a short time frame.  That was back in the middle of 2008, shortly before the worst stock market crash since the Great Depression.

Unless the price of oil starts really bouncing back, the U.S. economy is going to be hit really hard.

Since 2009, oil industry employment has risen by 50 percent.  And jobs in the oil industry pay quite well.  One figure that I saw put the average weekly wage at about 1700 dollars.

But now we aren’t going to be gaining those types of jobs.  Instead, we are going to rapidly start losing them.

Already, the oil rig count has dropped for three weeks in a row and is now at an 8 month low.  And as the oil industry suffers, all of the industries that it supports are also going to start feeling the pain.  In fact, Business Insider is reporting that Texas business executives are “freaked out” about what is happening…

Business executives in Texas are worried about the drop in oil prices.

On Monday, the Dallas Fed’s latest manufacturing survey showed that activity in Texas was slowing down.

The latest composite index came in at 4.1, widely missing expectations and down big from November’s reading. Expectations were for the index to come in at 9, down from 10.5 last month.

So while most Americans are feeling really good about the coming year, many of those with an inside view are becoming quite alarmed.  One Texas business executive went so far as to say that the stunning decline in oil prices was going to make things ugly … quickly.

Meanwhile, the 9 trillion dollar U.S. dollar carry trade is starting to unwind.

The following is an excerpt from a recent Zero Hedge article

Oil’s collapse is predicated by one major event: the explosion of the US Dollar carry trade. Worldwide, there is over $9 TRILLION in borrowed US Dollars that has been ploughed into risk assets.

Energy projects, particularly Oil Shale in the US, are one of the prime spots for this. But it is not the only one. Economies that are closely aligned with commodities (all of which are priced in US Dollars) are getting demolished too.

Just about everything will be hit as well. Most of the “recovery” of the last five years has been fueled by cheap borrowed Dollars. Now that the US Dollar has broken out of a multi-year range, you’re going to see more and more “risk assets” (read: projects or investments fueled by borrowed Dollars) blow up. Oil is just the beginning, not a  standalone story.

If things really pick up steam, there’s over $9 TRILLION worth of potential explosions waiting in the wings. Imagine if the entire economies of both Germany and Japan exploded and you’ve got a decent idea of the size of the potential impact on the financial system.

And that’s assuming NO increased leverage from derivative usage.

Ouch.

And yes, as that last excerpt mentioned, derivatives could soon become a massive problem.  The big banks are holding trillions in commodity derivatives that could blow up if the price of oil does not rebound.  Overall, there are five U.S. banks that each have more than 40 trillion dollars of exposure to derivatives of all types, and the total global derivatives bubble is at least 700 trillion dollars at this point.

At the same time, many are becoming concerned that the unprecedented bond bubble that we are witnessing could soon implode and trillions of dollars of “wealth” could disappear into thin air.

In fact, Bloomberg says that we should “get ready for a disastrous year” for bonds…

Get ready for a disastrous year for U.S. government bonds. That’s the message forecasters on Wall Street are sending.

With Federal Reserve Chair Janet Yellen poised to raise interest rates in 2015 for the first time in almost a decade, prognosticators are convinced Treasury yields have nowhere to go except up. Their calls for higher yields next year are the most aggressive since 2009, when U.S. debt securities suffered record losses, according to data compiled by Bloomberg.

That certainly does not sound very optimistic, does it?

Anyone with even a minimal amount of intelligence should be able to see the massive financial bubbles that the central banks of the world have created, and anyone with even a minimal amount of intelligence should be able to see that we are heading for a massive financial implosion which will be extraordinarily painful.

Unfortunately, as I wrote about yesterday, the American people have become “zombiefied“.  Instead of thinking for themselves, they let “the matrix” do their thinking for them.  And right now “the matrix” is telling them that everything is going to be just fine in 2015.

If you do not think that there is a propaganda machine that tells us what to think, I want you to watch the video posted below very carefully.  This video makes it so obvious that even a small child can understand it…

 

Four Reasons To Be Even Less Optimistic About The Global Financial System Than You Were Last Month

The cracks in the ice are getting bigger.  At this point it is really hard to have much confidence in the global financial system at all.  They told us that MF Global was an isolated incident.  Well, the horrific financial scandal over at PFGBest is essentially MF Global all over again.  They told us that we would not see a huge wave of municipal bankruptcies in the United States.  Well, three California cities have declared bankruptcy in less than a month.  They told us that we could have faith in the integrity of the global financial system.  Well, now we are finding out that global interest rates have been fixed by insiders for years.  They told us that Greece was an isolated problem and that none of the larger European nations would experience anything remotely similar.  Well, what is happening in Spain right now looks like an instant replay of exactly what happened in Greece.  So who are we supposed to believe?  Why does it seem like nearly everything that “the authorities” tell us turns out to be a lie?   What else haven’t they been telling us?

The following are four reasons to be even less optimistic about the global financial system than you were last month….

#1 PFGBest Is MF Global All Over Again

Do you remember that whole MF Global thing?

Do you remember how hundreds of millions of dollars of customer funds were “missing” due to “accounting irregularities”?

Well, it is happening again.

PFGBest is a brokerage firm in Cedar Falls, Iowa that mostly handles agricultural futures.

All hell broke loose when the National Futures Association discovered that a bank account that was supposed to be holding 225 million dollars of customer funds was only holding about 5 million dollars instead.

So where is the other 220 million dollars?

That is a very good question.

Of course it is not a promising sign that the head of PFGBest tried to commit suicide when this news came out.

A lot of PFGBest clients are going to be absolutely devastated by this scandal.  The following is from a recent Reuters article….

Farmers on Tuesday fumed at the prospect of financial losses, or at a minimum a lengthy wait for the return of frozen funds, due to alleged mismanagement at brokerage PFGBest, and some said they had been burned for the last time.

The U.S. futures industry reeled as regulators accused Iowa-based PFGBest of misappropriating more than $200 million in customer funds for more than two years, a new blow to trader trust just months after MF Global’s collapse.

Centered in the heart of farm belt, the firm handled agricultural futures accounts for a number of clients who grow corn, soybeans and cotton.

But it is not just PFGBest clients that are going to feel the pain of this scandal.

The truth is that this is going to deeply shake confidence in the entire global financial system.

Many dismissed what happened at MF Global as an “isolated incident”.

But now it is happening again.

Fool me once, shame on you.

Fool me twice, shame on me.

#2 A Third California City Goes Bankrupt In Less Than A Month

First it was Stockton.

Then it was Mammoth Lakes.

Now it is San Bernardino’s turn.

On Tuesday, the city council of San Bernardino, California voted to file for bankruptcy.

An article in the Los Angeles Times detailed the issues at the heart of San Bernardino’s financial problems….

The city’s fiscal crisis has been years in the making, compounded by the nation’s crushing recession and exacerbated by escalating pension costs, lucrative labor agreements, Sacramento’s raid on redevelopment funds and a city reserve that is tapped out, officials said.

While it would be easy to dump on the state of California (and that is something I have done quite often), the truth is that we are seeing municipal debt problems erupting all over the United States.

For example, the city of Scranton, Pennsylvania has such severe financial problems that the mayor of Scranton has ordered that all city employees be paid minimum wage until a solution to the crisis is found.

If this was television, Dwight Schrute would find a way to save the day for Scranton.

Unfortunately, this is real life and Dwight Schrute does not exist in real life.

#3 The Liborgate Scandal Keeps Getting Worse

We have been taught that we should all have faith in the integrity of the global financial system.

What a bunch of baloney that turned out to be.

It turns out that banksters have been colluding to fix global interest rates for years.

“Liborgate” is being called the biggest financial scandal in history.  Libor is important because it is one of the key benchmarks used to set prices for hundreds of trillions of dollars of loans, securities and derivatives.

British banking giant Barclays has already admitted that they were involved in manipulating Libor.

Barclays has already agreed to pay $453 million in fines to British and U.S. authorities.

But the truth is that it would have been totally impossible for Barclays to have manipulated Libor by themselves.

So who else was involved?

That was a question that was discussed in a recent article in The Economist….

Over the past week damning evidence has emerged, in documents detailing a settlement between Barclays and regulators in America and Britain, that employees at the bank and at several other unnamed banks tried to rig the number time and again over a period of at least five years. And worse is likely to emerge. Investigations by regulators in several countries, including Canada, America, Japan, the EU, Switzerland and Britain, are looking into allegations that LIBOR and similar rates were rigged by large numbers of banks. Corporations and lawyers, too, are examining whether they can sue Barclays or other banks for harm they have suffered. That could cost the banking industry tens of billions of dollars. “This is the banking industry’s tobacco moment,” says the chief executive of a multinational bank, referring to the lawsuits and settlements that cost America’s tobacco industry more than $200 billion in 1998. “It’s that big,” he says.

As many as 20 big banks have been named in various investigations or lawsuits alleging that LIBOR was rigged. The scandal also corrodes further what little remains of public trust in banks and those who run them.

So what does all of this mean?

The Wall Street Journal says that the credibility of the entire global financial system is at stake….

At stake is both the integrity of the world’s financial system and the credibility of the U.K. authorities to police it. Long before the current scandal, many European policy makers had concluded that London during the boom was the Wild West, whose loose standards are a threat to European financial stability. The Libor scandal suggests U.S. regulators have reached similar conclusions. The Commodities Futures Trading Commission, the U.S. regulatory body that first started investigating rate-fixing, left little doubt how seriously it regards the abuses it uncovered.

Once faith is shattered, it is incredibly difficult to rebuild.

And right now it is really hard to come up with a decent argument why anyone should trust their money to such a corrupt system.

#4 Spain Is Turning Into Greece

A central government drowning in debt?

Check.

A banking system on the verge of collapse?

Check.

Politicians pushing a forced austerity program that includes much higher taxes, much lower government spending and greatly reduced pay for government workers?

Check.

Wild rioting in the streets by protesters?

Check.

Let’s see….where have we seen this before?

Can anyone still possibly deny that Spain is going down the exact same road that Greece has gone?

Spanish Prime Minister Mariano Rajoy is proposing a huge slate of tough austerity measures including a 3 point increase in the Value Added Tax on goods and services.  If that 3 point hike is implemented, the Value Added Tax will rise to 21 percent.

Could you imagine going to the store and paying a 21 percent sales tax?

Ouch.

Rajoy is promising that these measures will get Spain back on the right track.

Of course we have already seen how well such austerity measures have worked in Greece.

The unemployment rate in Spain is already up to 24.4 percent, and now these austerity measures will slow the economy down even more.

No wonder there is rioting in the streets.  You can see high quality footage of the rioting that has been going on in Spain this week right here.  At one point police were seen firing rubber bullets at the protesters.

But of course the citizens of Spain could not live way above their means forever.  At some point every debt bubble ends, and when that happens the results are often incredibly painful.

This is a lesson that the United States has not learned either.  When we stop racking up more than a trillion dollars of additional government debt every year our “adjustment” will be exceedingly painful as well.

A little over a week ago, I wrote an article entitled “17 Reasons To Be EXTREMELY Concerned About The Second Half Of 2012“. I never imagined that things would get so much worse in just a week.

Everything seems to be accelerating these days.

That includes the decay that is happening in society.  A few days ago I made a list of 25 signs that society is falling apart, but then another story came along after I had finished my article that topped all of the examples in my list.  The following is how one man in West Virginia has been treating his wife….

During the conversation, according to the criminal complaint, Lizon’s wife told the woman that her husband had kept her chained up with metal padlocks and chains for about 10 years. The woman noticed scar tissue on the victim’s hands and ankles. Lizon’s wife told the woman that the scars were from the chains tearing into her skin.

Lizon’s wife told the woman that she and her husband were originally from Czechoslovakia, and that they live in Leroy, W.Va.

According to the complaint, the woman told investigators that the feet of Lizon’s wife were “mutilated and swollen,” one of which was missing a considerable amount of skin. Lizon’s wife told the woman that her husband smashed her foot with a bucket or scoop attachment of a farm tractor.

Lizon’s wife also told the woman Lizon called her his “slave,” and that whenever her husband entered the room she had to kneel down before him, according to the complaint.

Can you imagine anyone doing that?

Can you imagine any husband chaining his wife up for 10 years?

That is so sick that it is beyond words to describe it.

Unfortunately, that is not just one isolated incident of depravity in a world filled with goodness.

The truth is that the entire world system is saturated with depravity and corruption.

If anyone is willing to stand up for “the integrity of the global financial system”, I challenge you to leave a comment below explaining to the rest of us why we should still have blind faith in the system after everything that has happened.

I don’t imagine that too many people will even attempt to take me up on that challenge.

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