BREAKING – Major Employer Takes Stand Against Anti-Trump California, LEAVES State
California has led the way in the attacks against Trump, with several of its representatives openly defying the president… and major companies are starting to take notice.
After several other companies already left the state, Nestle USA has announced it is packing its bags and moving its headquarters and roughly 1,200 jobs across the country to Rosslyn, Virginia, via Investors.
This means more jobs are leaving an already fiscally challenged state, and there will likely be many more.
Big business is finally realizing California is not exactly business-friendly.
Two of the last three governors of the state are Democrats, and now the state is paying the price for liberal rule, especially under Governor Jerry Brown.
He has openly supported the far-left policies supporting illegal immigrants and refugees, and it is costing the state big time.
Even with all of its glitz and glamour, the state has a long history of struggling financially, and many experts blame the tax system Brown is using.
Christopher Thornberg, the founding partner of Beacon Economics, stated, “We have an enormous budget problem, and that’s because of the structure of our revenue system, not because of the fundamentals of the California economy,” via CNBC.
Add the mismanagement of the budget with the cost of supporting illegals and refugees, and you have a recipe for disaster. The money has to come from somewhere, and it does in the form of some of the highest taxes in the country, with more increases expected.
The result of this is businesses closing their doors in California and moving to greener pastures even if they have to go all the way across the country to do it. California’s loss, however, has been a boom for states like Texas, Arkansas, and Virginia, which offer much friendlier financial benefits for business owners.
If you look across the map, with few exceptions, blue states are not exactly booming these days. We can expect to see a lot more business defections in the coming months, especially if these Democrats continue to take hardline stances against Trump.
This, of course, bodes well for Trump and the Republicans as liberal business owners will be forced to realize their bottom line is being affected by the horrible mismanagement of their chosen representatives.
When they see how businesses in red states are booming and what Trump does for the economy overall, I think we will see more defections not only in businesses moving, but also in people leaving the Democrat party and going to a party that actually looks after their well-being rather than that of people who should not even be in this country.
Italy's Third-Biggest Bank Is Running Out of Time
Edward Robinson, Sonia Sirletti and
November 22, 2016, 7:01 PM EST November 23, 2016, 7:29 AM ESTThe end game may have finally arrived for Banca Monte dei Paschi di Siena SpA.
For seven years, Italy’s third-biggest bank has repeatedly skidded to the edge of collapse, only to be bailed out by investors or the government. Now Chief Executive Officer Marco Morelli has until year-end to raise 5 billion euros ($5.3 billion) of capital -- seven times its current market value -- and offload almost 28 billion euros in soured loans to save the world’s oldest lender.
QuickTake Q&A: Why Italy’s Bank Problem Challenges the Rule Book
“Time is running out,” said Stefano Girola, who helps manage about 40 billion euros at Syz Asset Management in Lugano, Switzerland. “It’s like a huge puzzle, and one missing piece will doom the whole project."
As part of the plan, Monte Paschi is proposing a voluntary swap of 4.3 billion euros of subordinated bonds to reduce the amount of stock it would need to sell. The bank expects holders of junior bonds to swap about a quarter of the available notes for equity in the first stage of its rescue plan. It may also announce an offer for deeply subordinated securities known as Fresh bonds at 23.2 percent of face value, subject to review by authorities, the bank said on Wednesday.
The offer and the wider plan need to be approved by shareholders on Thursday in a meeting at the lender’s headquarters in the Tuscan city of Siena. Investors are so frustrated with Monte Paschi’s recurrent crises that there was concern ahead of the vote that the bank would not muster the quorum of 20 percent of its stockholders. Monte Paschi has reached that requirement to hold the vote, according to a person with knowledge of the process.
‘Bigger Challenge’"Given the terms of the swap -- or rather the fact the the terms are not really known -- I would consider 1 billion of turnout a quite successful result," said Jacopo Ceccatelli, CEO of Marzotto SIM SpA, a Milan-based broker-dealer. “At this point it’s really difficult to say whether this would be sufficient to successfully go through with the capital increase."
Once past that hurdle, Morelli will face the bigger challenge: persuading new investors to commit money to an institution that’s seen its stock fall by 99 percent since 2009, recorded 15 billion euros in losses and been branded Europe’s shakiest major bank by regulators. He can’t count on the state to come to the rescue should he fail, because new European Union rules require bondholders and stockholders to absorb losses in the event of a bailout, an outcome that could cause a political firestorm.
An official at Monte Paschi declined to comment on the capital raising plans.
How the China Shock, Deep and Swift, Spurred the Rise of Trump
Many assumed the U.S. would withstand the import threat as it had with Japan, Mexico; devastation in Hickory, N.C.By Bob Davis and Jon Hilsenrath
HICKORY, N.C.—In the late 1990s, this furniture-making hub seemed sheltered from the disruptive forces of globalization. Laid-off steelworkers from West Virginia, Tennessee and beyond streamed here for new jobs building beds, tables and chairs for American homes. The unemployment rate fell below 2%.
These days, Hickory is still suffering from a series of economic shocks, none more powerful than China’s rise as an export power. The invasion of imported furniture drove factories out of business, erased thousands of jobs and helped drive unemployment above 15% in 2010.
Stuart Shoun, 59 years old, has been laid off three times since 1999. After one layoff, the Hickory machinist studied architecture at a community college but then couldn’t find a job and returned to the furniture industry. He makes $45,000 a year, the same as he did nearly 20 years ago and $14,000 a year poorer after adjusting for inflation.
Hickory, N.C., is still suffering from the aftershocks of Chinese imports. Donald Trump has tapped into potent anti-free-trade sentiment on the campaign trail. Video: Madeline Marshall/WSJ. Photo: Mike Belleme for The Wall Street JournalMr. Shoun ’s son, Steven, a trained furniture upholsterer, manages a junkyard and discourages his own son, now in college, from working in the industry that gave North Carolina the nickname “Furniture Capital of the World.” Steven Shoun says he blames “the people who run our country and who run our companies” for Hickory’s economic turmoil.
Mr. Shoun and his father say they favor Donald Trump for president, even though they don’t plan to vote. “I don’t think one vote will make any difference,” says Stuart Shoun.
When import booms from Japan, Mexico and Asian “tiger” economies such as Taiwan arrived in the U.S., many cities and towns were able to adapt.
China was different. Its emergence as a trade powerhouse rattled the American economy more violently than economists and policy makers anticipated at the time or realized for years later. The U.S. workforce adapted more slowly than expected.
What happened with Chinese imports is an example of how much of the conventional wisdom about economics that held sway in the late 1990s, including the role of trade, technology and central banking, has since slowly unraveled.
The aftershocks are sowing deep-seated political discontent this election year. Disillusionment with globalization has fed one of the most unconventional political seasons in modern history, with Bernie Sanders and especially Donald Trump tapping into potent anti-free-trade sentiment.
Both presidential candidates aimed much of their criticism at 1994’s North American Free Trade Agreement, which boosted imports from Mexico. Even then, though, the real culprit was China, economists now say.
Many U.S. factories that moved to Mexico did so to match prices from China. Some of the new Mexican factories helped support U.S. jobs. For example, fabrics made in the U.S. are turned into clothing in Mexico for sale globally by U.S. companies.
David Autor, a Massachusetts Institute of Technology economist who has studied trade, labor markets and technological change, calls China’s economy a “500-ton boulder perched on a ledge.” At some point, it would tumble and splatter what was below, but “you just didn’t know when,” he says.
Century survived the invasion of Chinese imports by focusing its U.S. production on made-to-order furniture. PHOTOS: MIKE BELLEME FOR THE WALL STREET JOURNALEconomists have long argued that while free trade creates winners and losers, the net results are beneficial. Americans gained from inexpensive imports and filled their homes with low-price bicycles, jewelry and kitchenware. U.S. companies won access to overseas markets.
Workers in industries exposed to imports were expected to upgrade their job skills or move somewhere offering fresh opportunities.
Japan’s invasion in the 1970s largely hit industries in cities with broad manufacturing bases on which to fall back. In Akron, Ohio, long the center of the U.S. tire industry, chemists trained at the University of Akron helped create a local polymer industry that employs tens of thousands of workers, said David Lieberth, a former Akron deputy mayor who chronicles the city’s history.
China upended many of those assumptions. No other country came close to its combination of a vast working-age population, super-low wages, government support, cheap currency and productivity gains.
Imports from China as a percentage of U.S. economic output doubled within four years of China joining the World Trade Organization in 2001. Mexico took 12 years to do the same thing after Nafta. Japan took just as long after becoming a major U.S. supplier in 1974.
By last year, imports from China equaled 2.7% of U.S. gross domestic product, a percentage point larger than Japan or Mexico ever won.
Japan’s import wave also challenged a limited group of advanced manufacturing industries, largely autos, steel and consumer electronics. China’s low-cost imports swept the entire U.S., squeezing producers of electronics in San Jose, Calif., sporting goods in Orange County, Calif., jewelry in Providence, R.I., shoes in West Plains, Mo., toys in Murray, Ky., and lounge chairs in Tupelo, Miss., among many other industries and communities.
Thank You Kent Lamberson
Here’s a unique sign of inflation
January 9, 2017
Sovereign Valley Farm, Chile
I remember the first time I ever saw a $100 bill.
It was back in the early 80s, I must have only been 5 or 6 years old.
My parents took my sister and I to a fancy restaurant, and I distinctly remember a man dressed in a dark business suit a few tables over paying his bill with a crisp $100 note.
He pulled it out of his wallet, slid it onto the table, and walked away.
I was dumbfounded. It was more money than I had ever seen in my young life.
None of my friends had ever seen a $100 bill, and I was the big news at school the next day, regaling the whole class with stories of my proximity to such vast wealth.
Of course, back then, a $100 bill truly was a rare sighting because prices were so much lower.
A can of Campbell’s soup was 25 cents. Today it costs 4x as much.
A movie ticket ran about $3.50, according to the National Association of Theater Owners. Today it’s almost to $9.
Gasoline was 86 cents per gallon. Now it’s $2.20, and that’s after a major price collapse.
$100 could practically pay the rent in a lot of places back in the 80s.
That’s obviously no longer the case. Even a mundane trip to the grocery store can easily blow through $100 without feeling unusual.
$100 simply isn’t the awe-inspiring symbol of wealth that it used to be. And that’s because of inflation.
One measure of this trend is the average lifespan of the $100 bill.
As money changes hands during routine transactions, the constant wear and tear eventually starts to break down the paper.
You probably have a few bills in your wallet that look like they’re about to disintegrate.
The more frequently a bill is used, the faster that breakdown occurs.
According to the Federal Reserve, for example, a typical $1 bill lasts for about 5.8 years before becoming so fragile that it gets withdrawn from circulation and destroyed.
A $100 bill, on the other hand, lasts for 15.0 years.
This makes sense given that a $1 bill is used so much more frequently.
But what’s interesting is that, even as late as 2011, the average $100 bill lasted 21.6 years before becoming worn out.
So according to Federal Reserve data, the average lifespan of a $100 bill has fallen by more than 30% over the last several years.
This is primarily due to a significant increase in use, i.e. $100 bills are used more frequently in day-to-day transactions… at the gas station, grocery store, and even coffee shop.
Naturally, this increased use of the $100 bill is because prices are higher than they’ve ever been– you can’t pay the grocery bill anymore with a twenty.
Wages and salaries have also increased over time. But not as fast as living costs.
According to the US Department of Labor, most people are still earning less than they were 17-years ago when adjusted for inflation.
And that’s precisely the point: inflation is a very deliberate and sustained form of theft.
When prices rise faster than income levels, they’re ultimately stealing from your standard of living.
But not just once.
Inflation steals from you month after month, year after year. It never stops.
This has long been a common tactic for financially desperate governments throughout history.
Think about it– if they sent gun-toting police to your house demanding 2% of your wealth, there would be rioting in the streets.
But if the government and central bank engineer 2% inflation, no one cares.
And that’s the really amazing thing about inflation: governments and academia have managed to convince people that a little bit of inflation is totally normal.
They start early, even teaching students this garbage in high school economics classes.
Of course, they always forget to teach the part about how destructive inflation is over time.
2% inflation compounded year after year after year can have an explosive effect, doubling, tripling, and quadrupling prices.
The thing is, though, because inflation occurs so gradually, it feels ‘normal’.
Only when we look back to the past can we see how dramatically inflation has changed people’s lives.
The US Labor Department reports, for example, that in the late 1960s, fewer than half of households with children were dual income.
In other words, one parent supported the family on a single income.
Today in nearly 70% of households with children, BOTH parents have to work in order to make ends meet.
Just like the dramatic decline in the purchasing power of a $100 bill, this trend is a prime example of how inflation steals from people over time.
Policymakers will always downplay inflation.
Back in 2011 Federal Reserve official Bill Dudley infamously responded to soaring food prices by citing the fact that an iPad 2 was cheaper than an iPad 1.
(Prompting one reporter to say, “I can’t eat an iPad!”)
They may even reinvent the way they calculate inflation.
But despite the speeches and statistics, most of which focus on monthly or quarterly changes, the long-term effects of inflation are very much with us.
And they aren’t going away.
It would be foolish to assume that the people who are causing this problem will suddenly fix it.
If anything, they’ll make it worse.
In fact, central bankers around the world have been concerned that inflation isn’t high enough… as if a brief period of price stability is somehow a bad thing.
We should absolutely expect higher inflation.
Central bankers want inflation. Governments want inflation. And they’re the ones who have the power to make it happen.
Real assets, like precious metals, productive real estate, profitable businesses, etc. offer safety from inflation, especially if your savings is denominated in an overvalued paper currency.
Italy proves that banks are not the risk-free fantasy we’re told to believe
December 21, 2016
Santiago, ChileIn the late 1400s, the city-states of Italy were among most dominant powers in the world.
Most of the city-states had abandoned the feudal system that persisted across Europe.
So Italy was one of the only places on the continent where anyone, including foreigners, could work hard, take risks, and become wealthy.
People could start businesses and own private property– revolutionary concepts in the 1400s.
Italy was truly the America of its day, and people from all over Europe flocked to the city-states in search of wealth and freedom.
Scientific, medical, and technological advancement flourished, as did commerce and banking.
The Medici Bank in Florence was by far the largest bank in Europe in the 1400s, and they helped popularize a double-entry system of accounting and the widespread use of credit, both of which still define modern banking.
Early Renaissance banks realized that hauling giant bags of gold coins across the countryside to settle payments with one another was expensive and risky.
Instead, every time they made or received a payment, the banks would adjust their accounting ledgers and then periodically get together to make sure everyone’s numbers matched up.
Italian banks perfected this technique and developed a comprehensive set of accounting rules that everyone followed.
When the bank Monte dei Paschi di Siena was founded in 1472, they adopted this system as well.
What’s interesting is that Monte dei Paschi di Siena still exists today (just barely).
And they’re basically still using the same system.
Despite all of our modern technology, commercial banking has changed very little over the past 5+ centuries.
Even today, whenever banks transact with one another, they’re merely making accounting entries in their ledgers.
It’s not like there’s actually any money that changes hands. Banks don’t FedEx cash or coin to one another to settle up. It’s all just digits on an electronic balance sheet.
The biggest “advance” in modern banking has been the involvement of government and central banks.
Back in the Renaissance, banks spent years building up a solid reputation as conservative, responsible custodians of other people’s money.
They had to earn their customer’s trust the old-fashioned way. It wasn’t handed to them by some government agency.
Today, few people give a single thought about their bank.
We’ve been programmed to sign over our life’s savings to a complete stranger simply because the government says it’s OK.
That same government has lied to us about everything else imaginable, ranging from the existence of Weapons of Mass Destruction to whether or not he had “sexual relations with that woman.”
Yet this government-sanctioned trust is routinely abused.
Hardly a month goes by these days without a major banking scandal.
Wells Fargo is in the spotlight right now for having fraudulently manufactured new accounts without customers’ consent (and then charging FEES on top of that).
And right this moment Wells Fargo is scrambling once again for submitting a questionable solvency plan to the Federal Reserve.
But that’s just the tip of the iceberg.
Banks have been caught red-handed colluding to manipulate interest rates, exchange rates, and commodities prices.
They force law-abiding customers to jump through bureaucratic hoops to prove that we aren’t criminal terrorists, but then giant banks like HSBC and Barclays literally do business with terrorist groups.
They maintain very loose controls, allowing “rogue traders” to lose billions of dollars on stupid bets.
And they maintain a strict culture of secrecy.
As depositors, we don’t have the foggiest idea what our banks are actually doing with our money.
Their financial statements provide cursory summary numbers for categories like “LOANS” or “INVESTMENTS”.
But there’s no detail for us to see whether those loans and investments are safe and conservative… or whether they’ve put our savings in danger once again.
Banks also notoriously abuse accounting tricks to massage their numbers and hide losses.
One common technique that banks have used over the last few years is reclassifying their bond investments.
Typically a bank has to report the gains and losses of its bond investments each quarter.
But banks have the option to reclassify their bond investments into a different category called “hold to maturity,” in which they no longer have to report the losses.
As you can imagine, when bond values decline, many banks conveniently reclassify their portfolios, thus hiding the losses.
Amazingly enough, this deceit is totally legal under modern accounting rules.
Look, I’m not suggesting that banks are about to collapse. Some of them are in great shape.
And others… yeah, they’re about to collapse. Like Monte dei Paschi di Siena, and most of the rest of the Italian banking system.
What’s important is to realize that banking is a black box with zero transparency, NOT the risk-free fantasy that we have been told.
We can see this right now in Italy.
If a bank goes under, shareholders will be wiped out first.
But as a depositor, you’re actually a creditor of the bank– an unsecuredcreditor who has nothing more than a claim on your account balance.
Most countries, including Canada, the United States, and most of Europe, have passed “bail-in” legislation to penalize a bank’s creditors in the event they collapse.
Europe’s Union Bank Recovery and Resolution Directive became effective on January 1st, and the Federal Reserve is issuing a new bail-in rule next week.
So, depositors can be on the hook for a bank’s losses as well, just as we saw in Cyprus back in 2013.
Depositors are supposedly protected by deposit insurance like the FDIC.
But a single bank failure can easily wipe out these insurance funds (which happened in 2008).
And most governments are now too broke to recapitalize them.
Bottom line: It matters where you put your money. They evidence is pretty obvious that banks are not risk-free.
Why take the chance?
You can quickly mitigate these risks at practically zero cost by holding a portion of your savings in a safer, better capitalized bank… or outside the banking system in physical cash or gold.
Believe it or not, for every minute that goes by, our federal government’s financial sinkhole grows deeper by about $10 million! The U.S. public needs to know the current and future issues concerning the U.S.’s finances.
Post-Brexit Britain set to become fastest growing G7 economy
By World Tribune on October 6, 2016
The dire predictions by the anti-Brexit crowd that a vote to leave the European Union would quickly send Britain’s economy crashing into the dark ages is looking like, well, rubbish.
In fact, the International Monetary Fund’s (IMF’s) outlook for the UK’s immediate post-Brexit economy is upbeat. The UK will be the fastest growing major economy on the planet this year, the IMF said.
Graphic by UK’s TelegraphMaurice Obstfeld, the IMF’s economic counselor, said the fund had been right to warn about the risks of Brexit but added: “We are looking at a soft landing for 2016. We are happy about the outcome.”
In its latest World Economic Outlook, the IMF pointed to “action taken by the Bank of England following the Brexit vote, including cutting interest rates and freeing up more cash for banks to lend had helped to maintain confidence in the economy.”
The IMF expects the UK economy to grow by 1.8 percent in 2016, putting the country on course to be the fastest growing G7 economy this year.
Philip Hammond, Tory parliament member and Chancellor of the Exchequer, said the UK economy had shown its resilience since Brexit but there was no room for complacency.
“There are still challenges ahead, as the IMF note in their estimate for growth in 2017. That is why I stand ready to take action to support our economy through any period of turbulence and will continue to pursue the long-term goals of fiscal consolidation and improved productivity.”
Meanwhile, The IMF said the U.S. economy will expand by only 1.6 percent this year, down from 2.6 percent in 2015.
“The U.S. economy has lost momentum over the past few quarters, and the expectation of a pickup in the second quarter of 2016 has not been realized,” the IMF said.
The IMF’s latest report described the pace of credit growth in China as “dangerous” and branded the country’s growth targets “unsustainably high”.
Deutsche Bank can only be saved by the German government, strategist saysMatt Clinch | @mattclinch81
21 Hours AgoCNBC.com
Does Deutsche Bank need a bailout? Wednesday, 28 Sep 2016 | 4:04 PM ET | 04:52Only a substantial intervention by the German government can stop the collapse of the country's largest lender, Deutsche Bank, according to Stefan Müller, the CEO of Frankfurt-based boutique research company DGWA.
"Deutsche Bank doesn't realize that something serious needs to happen," he told CNBC via telephone on Thursday morning. "(CEO John) Cryan clearly showed that he has no idea how to survive."
The bank has repeatedly defended itself over recent weeks, however, telling CNBC that there is "no reason to worry" and that the bank had a "comfortable cushion."
The embattled German lender saw a respite on Wednesday from hefty selling seen in previous sessions amid contradictory reports on whether the German government had a rescue plan for the bank. Cryan also tried to reassure investors about the bank's capital strength by telling the tabloid newspaper Bild that "state aid is not an issue."
Deutsche Bank's wild ride Wednesday, 28 Sep 2016 | 8:03 AM ET | 02:11The outspoken Müller - who does not hold a position on the bank's stock - said he believed Chancellor Angela Merkel had personally forced Cryan to do the interview with the German newspaper. He also told CNBC that there was no way the German government would admit to it, but, "of course there is a rescue plan, that's their job."
Müller added that any type of financial aid or bailout would be difficult for Merkel ahead of elections next year as well as creating "moral hazard" for other lenders - where there is a lack of incentive to guard against potential risks due to the government backstop.
Deutsche Bank's stock has slid over 50 percent so far this year and the cost of insuring exposure to its debt has risen sharply. It has come under pressure from aggressive short-selling, notably from some large hedge funds. This includes Soros Fund Management, the family office run by George Soros, which has built up a short position, according to a regulatory filing earlier this year.
The latest concerns about the bank come after the U.S. Justice Department suggested it pay $14 billion to settle a number of investigations related to mortgage securities. The probes refer to the way it sold these securities before the financial crash of 2008. It came after initial worries about Deutsche Bank surfaced earlier in the year, with investors detailing concerns over its exposure to the energy sector and a possible cash crunch.
We will solve our problems by ourself: Deutsche Bank Monday, 26 Sep 2016 | 6:44 AM ET | 02:45Many analysts also do not expect government support will come at this point, or that it will even be necessary, however. Many also don't see a systemic risk to other banks or that this could trigger a financial crash like that seen in 2008.
"It's not a Lehmans moment in the offing. Banks are generally better capitalized and able to cope with adverse shocks. And Deutsche's derivatives exposure can be overstated," Neil Wilson, a markets analyst at London-based spreadbetter ETX Capital said in a note Wednesday. "Deutsche's problem is not capitalization – it's just that its costs have soared (mainly through litigation and fines) and it's not that profitable anymore."
Meanwhile, Markus Stadlmann, chief investment officer of Lloyds Private Banking, told CNBC Thursday that investors shouldn't throw the "baby out with bath water" with regards to the bank.
"Deutsche still has a very strong franchise, I think John Cryan is a very strong CEO who can turn the ship around," he said. "It has a lot of clout in European markets but also in the Middle East, some Asian markets ... it's more of a balance sheet, liquidity, capital issue."
Deutsche Bank's market capitalization currently stands at around $16.8 billion and there's hopes that the $14 billion settlement from the DOJ would be reduced. Joerg Eigendorf, head of communications at Deutsche Bank, told CNBC earlier this month that the bank was "very confident" it would be able to negotiate this number "significantly down."
Müller said he believes that the government will not pay the settlement but will instead guarantee the survival of a heavily-restructured Deutsche Bank, which would thus would avoid a collapse.
"The next hard facts will be (third-quarter earnings figures on October 27) and a rating downgrade – we also expect management 'news' soon," Müller said in an email to CNBC on Wednesday.
The Economic Collapse: Are You Prepared For The Coming Economic Collapse And The Next Great Depression?