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Bruce Enberg's Commentary

What's the daily bag limit on McDucks?

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Dallas Federal Reserve President Richard Fisher said Friday in a Fox News interview that the US economy is threatened by higher wages. His solution is to head this calamity off by raising interest rates so that hiring is cut back. He fears that higher wages are inflationary.

The Fed as a whole has been trying to create inflation in order to stop the rich from hoarding cash. The Fed has set a modest goal of 2% inflation instead of the 4 to 6% we really need to make such a policy work to jump start real investing (real as in creating jobs). Creating jobs is part of the Fed's legal mandate and the results have not been stellar to say the least.

And guess what? A census of billionaires by Wealth-X and UBS (a census not a poll because a representative sample is all of them, so they just asked them) found that they're indeed hoarding cash. The billionaire's money bins have 1000% more cash in them than a year ago. Weaker billionaires have had to quit swimming in their money bins out of a fear of drowning.

Last Updated on Thursday, 25 September 2014 21:13 Read more...

Are you Pent-up?

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Federal Reserve Chair Janet Yellen just introduced a new term into Fed Speak', "pent-up wage deflation". This seems to be an effort to explain away the problem of stagnant wages in the US economy that are not allowing the Fed to meet its 2% inflation goal by blaming it on the "inability or unwillingness of US firms to drastically cut wages" after the Bush collapse in 2008. This, according to the Fed, is making it possible for companies to now expand employment without raising wages. Ms. Yellen did acknowledge that real wages had been declining for some time prior to the crash (real wages have been declining for 33 years, but who's counting).

 

Deflation is always the goal of an economic collapse as this further enriches the hoarders of cash since they can buy more assets for 10 cents on the dollar, and drastically increases the burden on anyone who is in debt since they now owe a much bigger percentage of their declining income on devalued property.

 

Last Updated on Friday, 22 August 2014 20:42 Read more...

We're not Fair and Balanced, we tell the truth

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New unemployment claims dipped to 284,000 in the past week, and this is the lowest number since the week of February 18 2006. This was about the time that it became apparent that the Bush Depression was going to happen. History tells us that without significant gov't intervention it takes about ten years to recover from a Bank Panic, that's what they used to call these things prior to the New Deal that made bank crashes impossible to happen. Of course Reagan, Bush, Clinton & Bush undid all of those regulations and safeguards with the predictable result.

 

So now we're seeing the recovery start to pick up speed, but let's be clear, it's not because Obama has been able to do much to fix things. He just hasn't done any new damage and has more or less kept the Republicans in check. Corporate America is another matter, despite record stock prices, record profits, record CEO salaries and trillions in cash on hand they are refusing to invest at pre-crash levels. Just returning to those levels of investment would create 2 million new jobs, but they'll have none of it, and why should they? Things are going swimmingly for the very few at the top and it only stands to get better for them as the US drifts into its place as the largest third world economy.

 

The Federal Reserve has been trying to force their greedy corporate hands by creating inflation with only modest results. The Fed is basically too timid to take the kind of 'reckless' action that it would take to convince corporate America that they'd better try harder to make money, or watch their personal holdings evaporate to inflation. Or maybe they're really all in on it, or at least enough votes on the Fed Board are complicit to keep them from doing much more than keeping deflation from happening. That was the purpose of holding trillions in cash, we had been certain to a classic deflation spiral that would have allowed the cash hoarders to buy assets for 10 cents on the dollar. A 1000% profit is far better than working for a living.

 

Last Updated on Friday, 25 July 2014 20:58 Read more...

It takes a sharp wooden stake

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The new unemployment claims reported on last week were at a seven year low, the report for this week is up again close to the moving average, but overall it's not bad news for the economy. We will probably see more people leaving the workforce now that they don't need to stay with the company that provides them health insurance, and this should be reflected in a falling unemployment rate. Worker mobility should improve from this 'portability' aspect of ObamaCare, and this could result in fewer people being laid off since workers are able leave a company for another job rather than hanging on until the ax falls.

 

In theory, we should see an upturn in people creating their own business since they don't need to worry about finding health insurance. There is, however, the problem that if a person is a college graduate her or she is likely be carrying a large student debt load and this hampers entrepreneurship. Unless you simply take Mitt Romney's advice and borrow the money from your father to get started,  - it worked great for him.

 

Last Updated on Thursday, 22 May 2014 21:05 Read more...

"Børk, Børk, Børk"

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You know how the right has been constantly complaining about Obama's ballooning deficit? They have of course been wrong about that since the day Obama inherited Bush's $1.5t annual deficit and immediately slashed it by getting rid of private crony contractors. There has been a steady decline in budget shortfall ever since, and the latest numbers have set new records. The deficit for the first half of this fiscal year starting last October 1st was $413b, and this was a decline of $187 billion compared to the same time last year. These numbers were provided by the Treasury Department, so the Right will claim the numbers are fixed. They can't prove that, because math is just voodoo as far as the Right is concerned.

Further more, the deficit for March was only $37 billion, down from $107 billion in March of last year. This particular number was the smallest deficit for the month of March since 2000, (when another Democrat was POTUS).

The deficit is expected to be slightly more than more than 4% of GDP this fiscal year, a drop from a high of almost 10% of the GDP in 2009 at the end of the Bush Adm. This trend shows the deficit falling faster than in any year since the end of World War II, dropping from $1.1 trillion in 2012 to $680 billion. Conservatives had predicted a runaway deficit by this time with interest alone exceeding all possible tax revenue, and of course had Obama been forced to follow Bush's policies this would have come to pass.

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