The Total Amount Of Debt In The World Just Hit A Record $152,000,000,000,000 (152 Trillion)
If anyone ever asks you how much debt there is in the world, now you will know the answer. According to the IMF, the total amount of debt around the globe has now hit a staggering 152 trillion dollars. That is an amount of money that is almost unimaginable, and the IMF says that it is equivalent to 225 percent of global GDP. It is the biggest debt bubble in the history of the planet, and it is rising at an extremely alarming pace. Experts all over the world agree that when this debt bubble finally bursts, it is going to create an economic crisis on a scale that humanity has never seen before.
When I first saw this number I was absolutely astounded at how reckless we all have become, and I was also amazed that there was hardly anything about this announcement in the mainstream media in the United States. The following excerpt comes from a story in a major British news source…
The International Monetary Fund has urged governments to take action to tackle a record $152tn debt mountain before it triggers a fresh global financial and economic crisis. Warning that debt levels were not just high but rising, the IMF said it was vital to intervene early in order to mitigate the risks of a repeat of the damaging events that began with the collapse of the US sub-prime housing bubble almost a decade ago. It said that new research in its half-yearly fiscal monitor covering 113 countries had shown that debt was currently 225% of global GDP, with the private sector responsible for two-thirds of the total.
Right now the mainstream media in the United States is so obsessed with Trump and Clinton that almost every other important story is pushed to the side, but it boggles my mind how this cannot be major front page news.
More Americans Falling Behind on Car Loan Payments
Subprime borrowers are falling behind on their car loan payments at the highest rate in more than six years, and some bonds backed by these loans are vulnerable to getting downgraded, according to S&P Global Ratings.
Competition has spurred lenders to loosen standards and resulted in more delinquencies and default by people with weak credit, the ratings firm said. Subprime borrowers were behind by more than 60 days on about 4.85 percent of auto loans in August, the highest level since January 2010. The rate was 4.14 percent in August of last year, S&P said. For prime loans, delinquencies in August rose to 0.5 percent from 0.41 percent in the same month in 2015. The figures apply to loans that have been bundled into bonds.
The ratings firm said it may have to downgrade some subprime auto loan securities that have high-yield grades because of the increased delinquencies and loan losses, a statement it first made last month.
Some investors believe that subprime auto loans will continue to deteriorate, and have looked for ways to bet against them. After the financial crisis, mortgage lenders have been required by law to verify that applicants can repay their debt, but car lenders do not have that obligation. In the 12 months ended in June, only 5.2 percent of car loan applications were rejected, down from 11.1 percent in the 12 months ended in October 2015, according to research from the Federal Reserve Bank of New York. Lenders are making longer-term loans than before, and used car prices have fallen, which also could hurt loan recoveries, S&P said on Tuesday.
Wells Fargo CFO says accounts scandal won't hit profit much
Wells Fargo & Co's (WFC.N) chief financial officer said efforts by states to penalize its business over an unauthorized-accounts scandal would not affect third-quarter earnings "much", the Wall Street Journal reported, citing a recording of an internal call.
John Shrewsberry was recorded as saying the bank would only take "some legal set-asides" but publicizing this "might incentivize people to do more, to make it tougher on Wells Fargo ...," the Journal reported.
The hour-long call with 500 senior Wells Fargo executives took place on Monday and was intended to lay out the bank's strategy to move past the scandal, the newspaper reported. Wells Fargo representatives were not immediately available for comment.
The bank has been under pressure to show that it is ready to make amends and hold management accountable after government investigations revealed that some of its employees had opened as many as 2 million accounts without customers' knowledge or permission in order to meet sales targets.
A large chunk of Americans think their healthcare is getting worse
A large chunk of Americans believe that they are getting worse healthcare than they used to.
According to a Morning Consult poll sponsored by the American College of Emergency Physicians, 30% of Americans surveyed said that their healthcare coverage has gotten worse over the past year whereas only 15% said it has improved. 51% said it was generally unchanged.
Additionally 24% of Americans said they had lost access to their doctor in the last year due to changes in their insurance company's coverage network. On the cost side, 55% of those surveyed said that their healthcare costs had increased, with 20% of Americans saying their costs had gone up "much more" according to the poll. Only 11% said they were paying less or much less according to the poll.
Perhaps most startling, the poll found that many Americans are delaying care until their condition forces them to see a doctor due to costs. 30% of those surveyed said they delayed or avoided emergency care because of the cost. Out-of-pocket costs for healthcare have been skyrocketing, so it isn't a surprise a large number of Americans noticed a cost increase. On the other side, however, the total amount spent on healthcare in America is growing at the slowest pace in decades and the cost of premiums is also going up slower than in years past.
Theranos investor: We want our $96 million back
Theranos has voided two years of blood tests, faced federal probes and had its founder banned from owning or operating a lab for two years. And now, it's being sued by one of its biggest investors.
The embattled blood testing startup is being accused of securities fraud by Partner Fund Management, which invested $96.1 million into Theranos in February 2014. The hedge fund claims that the company, founder and CEO Elizabeth Holmes, and former chief operating officer Sunny Balwani engaged in "a series of lies, material misstatements and omissions" in order to get them to invest.
That's according to a letter the hedge fund sent to its investors about a lawsuit it filed on Monday. "Theranos and its principals knowingly and repeatedly lied that they had developed proprietary technologies that worked, were on the cusp of receiving all necessary regulatory clearances and approvals, and concealed the truth about the commercial viability of their technologies and methods," reads the letter, which was reviewed by CNNMoney.
The hedge fund is demanding that Theranos return its investment, and pay unspecified damages on top of that. This is the first time Theranos' investors have taken public action against the startup.
Fed's Evans Sees Benefits to Overshooting Inflation Target
The U.S. Federal Reserve should engineer monetary policy to spur inflation to rise above its two-percent target because the costs of doing so are less than in past decades, Chicago Federal Reserve Bank President Charles Evans said on Tuesday.
"I see benefits to trying to engineer policy to allow for the strong possibility of inflation overshooting its target," Evans said at an event in Sydney, Australia.
"I also think it would help to indicate that policymakers would be willing to accept the increased inflationary risk that might accompany further declines in unemployment," he added, citing his view that the U.S. economy is not yet at full employment and is in unprecedented territory compared to past cycles.
Speaking to reporters after the speech, Evans said he "could be fine" with the Fed raising rates in December, but he wanted to see how the economy and inflation progressed before deciding. Indeed, he cautioned that it might be better to wait for inflation to rise closer to the Fed's 2 percent target before moving.
“US Elections” Currently Number Four On List Of Excuses For Poor Earnings
While the majority of S&P 500 companies will report earnings results for Q3 2016 over the next few weeks, 5% of the companies in the index (25 companies) have already reported for the third quarter. Given the number of concerns in the market, have these companies discussed specific factors that had a negative impact on earnings or revenues for the third quarter during their earnings conference calls?
To answer this question, FactSet searched for specific terms related to a number of factors (i.e. “currency,” “China,” etc.) in the conference call transcripts of the S&P 500 companies that have already conducted third quarter earnings conference calls through October 7. FactSet then looked to see if the company cited a negative impact, expressed a negative sentiment (i.e. “volatility,” “uncertainty,” “pressure,” “headwind,” etc.), or discussed clear underperformance in relation to the factor for either the quarter just reported or in guidance for future quarters.
The presidential election received three mentions in the conference earnings calls that have happened so far. Here are some relative excerpts discussing the potential ramifications of the election:
“I think there is just great uncertainty as to what’s going to happen in the US in particular as a result of the outcome of the election. It goes without saying that people are sort of trying to decide who to choose and what the impact will be on the economy, and I think people are maybe just hunkering down a little bit…And I think once we get through the election and then that uncertainty is removed, hopefully the market will find some momentum.” –Yum! Brands
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More Pain Ahead for States’ Pension Plans
U.S. states can expect little short-term relief from their retirement plan problems, according to a Moody’s Investors Service report that predicts their total unfunded liabilities will increase by 40% over the next two years.
States are already liable for an estimated $1.25 trillion in pension costs for current employees and retirees. Amid low fiscal 2015 and 2016 investment returns, that number will reach an estimated $1.75 trillion in fiscal year 2017, Moody’s said.
While the median target return for state pension funds was 7.5%, the actual median return was 3.2% for the period ending June 30, 2015, and a 0.52% for the period ending June 30, 2016. “Some states have very large pension liabilities that they are having a hard time managing,” Marcia Van Wagner, a senior Moody’s analyst, said, adding that states “have not contributed sufficient amounts of money to their pension funds over a long period of time. They have a habit of underfunding their pensions.”
According to The Hill, Kentucky, New Jersey and Illinois are among the states where the pension crisis is the most severe amid large shortfalls between contributions to their pension funds and growing liabilities as more workers owed pensions retire. “Legislators and governors in many states will have to decide whether to face some budget pain now or leave it to their successors to take on significantly more pain in the future,” The Hill said.
Now may be the right the time to invest in gold
Despite recent falls in the price of gold, now may be the time to add exposure to the precious metal thanks to demand from Asia, experts suggest. Gold prices performed well earlier through 2016, hitting a two-year high of $1,366 per ounce in July this year, but have since slumped. Prices are down 6 percent over the past two weeks and finished around $1,254 at the end of Monday trading. Year-to-date, gold prices are up 18 percent.
However, many are seeing this as a price correction, which may be a good opportunity for investors looking to add exposure to the yellow metal and build more favourable positions. According to experts at UBS, gold is trading above its 200-day moving average and pent-up demand in China may prove beneficial.
"We think that the recent price correction and sizeable decline in positioning improves the risk-reward for gold, allowing those who are looking to build longer-term gold exposures to build positions at better levels," said Joni Teves, a UBS strategist, in a research note.
"Given cross-currents of factors and risks, we think there is room for investors to be patient in terms of timing the rebuilding of gold positions from here." The main reason for gold's recent slip is the rising strength of the dollar, as well as strong yields on U.S. bonds. But several factors are set to boost gold prices into the end of the year.
Ron Paul Says "Gold Going Up" Whether Trump Or Clinton Elected
Gold prices “are going up” whether Trump or Clinton are elected according to most analysts in the gold market including former Libertarian and Republican presidential candidate Ron Paul. Even Goldman Sachs, the primary significant bearish voice regarding gold prices is now bullish on gold in the medium and long term.
Ron Paul, an astute observer of the markets, warned in a CNBC interview that “if investors are looking for the next U.S. president to create stability in the markets, it’s not going to happen.” Along with jitters about the Federal Reserve’s next move on interest rates, investors are weighing whether Democratic contender Hillary Clinton or Republican nominee Donald Trump will be better for investors. The libertarian icon and former Texas Congressman suggested market players may not want to hold their breath.
“Politically speaking, there is going to be a lot more uncertainty and that may go into the markets … If people are depending on political stability to get the market going I don’t think it’s going to work out.”
“I think [the election] is up for grabs. It will depend on how many people stay at home,” he explained. “People are so disgusted with the two candidates that it’s pretty hard to predict” which will prevail, he said. For Paul, it doesn’t matter what the outcome is in November, as he doesn’t see much of a difference between the two parties.
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Why Fiscal Stimulus Won't Happen This Time Around
It’s a virtual certainty that another recession lies dead ahead. But what is truly startling is that the market is giving no recognition whatsoever to the fact that the nation’s fiscal situation is very rapidly going to hell in a handbasket.
And that there is virtually no prospect of another massive shovel-ready stimulus like the Obama $800 billion plan this time around. The warning signs of the impending fiscal paralysis are readily evident. The budget deficit in the year just ended soared by 37% — from $438 billion last year to just under $600 billion for FY 2016. But the outcome was actually worse due to various kinds of budget gimmickry addressed below.
In fact, the total public debt rose by $1.4 trillion during FY 2016, and will almost surely cross the $20 trillion mark soon after the next president is sworn to office. Needless to say, there will be no budget headroom at all for fiscal stimulus or the kind of huge infrastructure packages that both Hillary and Trump have bloviated about.
Whichever candidate enters the White House — and it looks like Hillary — is going to be shocked by the news that its first full year budget (FY 2018) will exhibit a $1 trillion deficit based on current tax and spending laws. And that’s before even a single dime of stimulus can be lobbed at a recessionary economy. This upcoming shock is not merely a matter of academic or even “political” interest. To the contrary, Wall Street is so confident of the latter that it has actually “priced-in” a fiscal rescue — a rinse and repeat version of the 2009 borrow-and-spend spree.
Ex-Wells Fargo worker: Intimidation included no bathroom breaks
Harassment, intimidation, even bathroom breaks denied. That's some of the "unconscionable behavior" a former Wells Fargo worker drove five hours to confront a bank executive about. Nathan Todd Davis said at a California State Assembly hearing on the Wells Fargo fake account scandal that he filed 50 ethics complaints during his decade of working at Wells Fargo -- but nothing was ever done.
"I've been harassed, intimidated, written up and denied bathroom breaks," said Davis, who drove 350 miles from his home in Lodi, California, to speak at the hearing. The former Wells Fargo worker directed his complaints to David Galasso, a senior Wells Fargo executive who was filling in at the hearing for CEO John Stumpf.
"The sales culture of Wells Fargo needs to be picked apart," he said, standing at the podium but looking to his right to address Galasso. Davis estimated that almost two-thirds of Wells Fargo employees "cheat the system" due to unreasonable sales pressure.
After a decade at Wells Fargo, Davis said he was fired in June 2016 for being "90 seconds late to work." The real problem, he said, was that he never "made it to management because I don't cheat." Galasso, who serves as Wells Fargo's head of community banking in Northern and Central California, did not address Davis' comments directly.
U.S. preparing to emulate Canada's private refugee-sponsor system
The United States appears to be working toward a system for privately sponsoring refugees, potentially making it the latest country to emulate the program Canada has deployed during the Syrian migration crisis.
A group that works with the government on resettling refugees says a pilot project is in the works. An assistant secretary of state reportedly referred to it at a public forum. Canada's immigration minister says he has heard about a pilot project, and one small-government advocate says he's been advising policy-makers on it.
David Bier of the libertarian Cato Institute said he used the experience of the northern neighbour while making the case to government officials that the private sector could play a bigger role in resettling refugees. He said there was initial reticence when he first discussed it last year with government officials, but he said the White House became enthusiastic and the State Department got involved in the details.
In the meantime, the Canadian program started getting international attention. "The fact that it was already in operation in Canada and had proven successful was invaluable to our advocacy," Bier said in an interview. "I have no doubt that this is going to happen (in the U.S.). This is something that's part of the agenda and is being developed by the most important actors in the American refugee system."
So Apparently the Holiday Shopping Season Started Already
Holiday shopping once marked that precious time between Thanksgiving and the December holidays. Santa sightings, piped-in Christmas carols and a mad rush at the mall all made buying those gifts almost a full contact sport. But this year, before the first frost, even before school started, Americans have been shopping. In fact, one in three began shopping before Labor Day, according to new data from Rubicon Project.
And they’re getting more splurgy, too. According to the data, the average person is planning to spend $1,175, up 12% from last year.
Men plan to spend more ($1,360 on average) than women ($1,028 on average), and parents plan to splurge the most – around $1,700, or $495 per child, mostly likely spent online.
Interestingly, despite reports of their staggering student debt, Millennials are also showing big increases in holiday spending this year, up 33% from 2015, to an average of $1,427. Most plan to shell out their dollars on apparel and accessories, video games and gift cards, Rubicon found.
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Obama wants private companies to help send humans to Mars by the 2030s
Obama said Tuesday that he wants private companies to help send humans to Mars by the 2030s.
Obama first said in 2010 he wanted to send astronauts “to orbit Mars and return them safely to Earth” by the mid-2030s with “a landing on Mars” to follow. In that speech at the Kennedy Space Center, Obama added that he expected to see such a landing in his lifetime. In an opinion article Tuesday on CNN.com, Obama said private companies would be a key to the lofty goals.
“We have set a clear goal vital to the next chapter of America's story in space: sending humans to Mars by the 2030s and returning them safely to Earth, with the ultimate ambition to one day remain there for an extended time,” Obama said.
“Getting to Mars will require continued cooperation between government and private innovators, and we're already well on our way,” he said. Obama noted that private companies will send astronauts to the international space station for the first time within the next two years and that NASA is working with “commercial partners to build new habitats that can sustain and transport astronauts on long-duration missions in deep space.”
Momentum Grows for Blockchain Gold Markets with 'Big Four' Partnership
Global consultancy EY and New York blockchain startup Paxos have announced that they are co-developing new technology solutions for the gold market.
Aimed at providing new tools for the clearing and settlement of gold transactions, the partnership will see the two firms leveraging Paxos’ blockchain-based network, Bankchain, as a basis for the services.
David Williams, EY’s partner for capital markets innovation, said in a statement: "We believe that the future of capital markets requires ever stronger and more innovative ecosystems, and expect this to be a key early example of the type of collaboration between FinTech firms and existing market participants that will truly transform the marketplace."
The idea of using the technology to reshape how gold markets function has gained traction in the past year and a half. Paxos, which rebranded to focus on blockchain solutions in tandem with its bitcoin exchange, announced this past summer that it was working with Euroclear on a similar project. The startup has moved in recent months to reposition itself amid growing interest in blockchain solutions among the world’s banks and corporations.
Yum Brands to return $13.5 billion to shareowners by 2019
Yum Brands Inc, owner of Pizza Hut, KFC and Taco Bell chains, said on Tuesday it will more than double returns to shareholders by 2019 as part of a program started last year, sending its shares up as much as 3.8 percent.
The company, which is spinning off its China division at the end of the month, now plans to expand its share buyback plan to $13.5 billion, including dividends. It already has bought back about $5.5 billion shares as part of a previously announced $6.2 billion capital return program that has reduced its share count by about 16 percent.
Yum did not immediately have a breakdown on much of the extra returns would be from share repurchases and how much from dividends. Executives say Yum Brands will be leaner and less exposed to the ups and downs of the restaurant business following the separation of Yum China and the sale of more company-owned restaurants to franchisees.
“It’s about delivering higher growth with lower risk,” Yum Brands Chief Executive Officer Greg Creed told Reuters in a telephone interview. Yum said franchisees will own 93 percent of the nearly 36,000 Yum restaurants remaining in the company after the China unit is carved off. The combined company currently is 77 percent franchised, in part because Yum China owns most of its restaurants.