Posts Tagged ‘Economy

21
Jun
16

Is Obama the Worst US President in History?

 

In his final year of US Presidency, let’s take a look at Barrack Obama’s legacy. What will he be remembered for? What direction has he steered America? Here are some points on results that Obama’s administration has results:

  • Raised the US Federal Debt from $6.3 trillion to $19.3 trillion
  • Unprecedented 65 million people globally displaced
  • Record global citizens killed from terrorism
  • A Record 94,610,000 Americans Not in Labor Force
  • Record gap between the rich and poor
  • The top 1% control over 50% of the nation’s wealth
  • CEO pay to average workers has soared to record high
  • 22% of children live in poverty in the United States
  • Record mass shootings in the US under his watch
  • Suicide is the fifth leading cause of death of children ages 5-14
  • More people die from drugs than from car accidents
  • More than one in four blacks live in poverty
  • The jobless rate for blacks is twice that of whites
  • The median income for black households is less than 60% that of white ones
  • Racial tensions in the US have been stoked under his watch
  • The middle class in the US is disappearing
  • More than ½ a million people are homeless in the US
  • More than 25 percent of U.S. students fail to graduate high school in four years
  • record losses in manufacturing jobs and record trade deficits

These few stats alone are up-hauling from a President who has claimed to have savedthe country from the Great Recession. Obama’s passing the buck mentality and deflecting responsibility exemplify signs of poor leadership. Only time will tell but Obama will most likely go down in history as one of the worst US Presidents.

 

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31
Mar
16

Is Target Corporation in Trouble?

Target Corporation a once promising retailer who drew in retail shoppers by the drove for their interesting line of merchandising which included mod retro fashions for women and men as well as interesting lines of home furnishings and accessories seems to be in trouble of late. After trying to aggressively expand in Canada, Target quickly closed all their entire Canadian operations and laid off their entire staff there after generating huge losses. They gave former Target Canada CEO Gregg Steinhafel’s a ‘walk-away’ package estimated at $61M (more than the entire severance for all the Canadian employee’s combined) for leading the expansion plan fiasco. Enter a Target store of late and you notice cheap, dull merchandising, limited hours of operation and empty parking lots. Although their stock is trading near multi-year highs, Target is inevitably in trouble. With stiff competition from other department stores, clothing chains and dollar stores competing for a declining demographic the fact is Target’s quality has dropped so dramatically it cannot compete. Recently downgraded by Barclay’s, Target has become too reliant on department store credit cards and huge markups on low quality merchandise as well as derivatives trading to generate profits and forgot what consumers want. It is following Kmart’s model and unless it strays away from that, it will follow the fate of the Canadian subsidiary.

24
Oct
11

Is Bernanke a liar?

Federal Reserve Bank Chairman Ben Bernanke has made some very famous calls only to change his opinion and stance afterwards. In 2005 Ben Bernanke said “home-price increases, largely reflect strong economic fundamentals.” This was shortly before the top and collapse in the US housing market that ensued. In 20007 Ben Bernanke also stated “…we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.” After the 2008 crisis initially caused by the subprime crisis he later said that no one could have forseen the impact of the subprime spillover. Imagine that, the head of the US Central Bank not knowing the actual exposure, risks and over-valuations of  lending products in the US banking system.

Bernanke also released a Fed report stating that high price of oil was the cause for the 2008 slowdown shortly after the crash. With the recent increase in the prices of oil, Bernanke changed his stance to recently say that the increasing price of oil has no impact on the economy. In 2006, Bernanke also stated “I have confidence, therefore, that however events play out in the short term, in the longer term the economy will grow at a healthy pace, raising living standards in the process. ” Again, a prediction wrong as the US living standards have dropped substantially with record poverty levels.

Bernanke has stated many times that the Fed’s dual purpose is to maintain price stability and keep unemployment low. But recently price inflation has been increasing (along with underlying commodities) while average wages have decreased (back to the living standards thing again) and actual unemployment has not improved. When a person of that power and level in government is paid to make such inaccurate predictions and moves, how is that possible? If we made such mistakes in our daily jobs we would probably not be around for very long.

With such missed calls, is Bernanke the PH.D really as bright as people perceive him to be or has he been placed at such a high position because the less bright someone is, the easier it is to control decisions from the outside (the powers that be of Wall Street)?  Who has benefited from his decisions while in power? What are his interests after he finishes his role as Federal Reserve Chairman? Will he follow his predecessor (Alan Greenspan) and hit the road to a role on Wall Street lined with the favours he’s handed out in his current decision making role? Does Bernanke constantly contradict himself or simply does he not want to tell the truth?

19
May
11

Is a Great Recession Coming to China?

With the majority of the media and analysts permanently bullish on the prospects of China (much like those of Japan’s in the late 1980’s, remember that?) you start to see some similarities as well as differences to previous economic cycles in the past Economies of Power. The expression ghost cities is starting to surface recently, referring to rural towns within the China where real estate developers have cranked up the supply of residential housing as well as commercial buildings to “prepare” for great expectations of people flocking to these newly built cities in the near future. How big are these projects? In many cases the amount of housing capacity available is ten times that of the population of the newly built city. In one case a town with a population of 30,000 boasts capacity for 1,000,000+ people.

What is wrong with this picture? With inflation fairly high in China (not to mention the actual number being much higher than what the government has reported), as well as the income levels way out of whack with the affordability to live in such areas, how can this economic growth plan be feasible? As well as how much of this over-building has contributed to China’s monsterous GDP growth of recent times? When you look at the recent problems in Dubai, they seemed to be dwarfed by the Chinese real estate conundrum of build, overbuild and then overbuild on top. The money supply in China has grown substantially since the 2008 US financial crisis at rates never seen before or perhaps have they been seen before?

When you compare past economic boom bust cycles, China’s current situation parallels that of America in the 1920’s (with China’s being to a much greater degree though). The free money credit system of the Roaring 1920’s made all Americans at that time feel like prosperity was boundless. Although poverty had reached record levels in the 1920’s but so had the number of wealthy individuals who had amassed fortunes via real estate and financial markets. Companies over-produced with high expectations for future demand. Leveraged Borrowing to invest in the real estate and capital markets had reached record highs in the 1920’s in America much like now in China and people paid premiums for luxury goods as well as high-end houses. Will the outcome for China become like that of America after the 1920’s or like Japan in the 1990’s or Dubai in recent times or much worse? How much would it’s economy fared had not it been reliant on over-production and over-consumption as well as over-building within the real estate sector? With the vacancy rate sky-rocketing in the thousands of skyscrapers built in this latest boom from Beijing to Shangai will the excessive gap between supply and demand cause a correction that will last for decades? Is the end of the Chinese economy coming?

23
Feb
11

Is Walmart Getting Desperate?

It doesn’t take a financial wizard to notice with 7 consecutive quarters of declining same store sales that something negative is brewing at Walmart. If you have visited a Walmart store recently, it becomes obvious that they have reduced the number of items they carry, sometimes leaving much more floor and shelve space than before. It wasn’t long ago that you could visit a Walmart and see the shelves packed with those everyday goods that everyone buys for the household and now there seems to be not enough of those products at every location. In the old days, Walmart’s everyday prices for products were lower than anywhere else, now only the sale items might be but with the rest of the non-sale items, the prices have been raised dramatically. Is it to make up for the fewer customers shopping at the stores or the increasing costs for them? Either or, this is far from Walmart’s old strategy to be the one stop shopping store for overall savings for the customer. The store hours seem to have been reduced at many Walmart locations.

I remember at one time, the line ups at the checkout were insane and now notice at Walmart even with fewer cash registers open, the line ups are shorter. If you notice around you’ll see a few of those people whose carts are filled to the brim with compulsive items and wonder what if it weren’t for those people, how would Walmart fare? With their domestic operations declining in growth, Walmart has focused on expanding beyond US borders with new supercenters in Canada and the rest of the world to make up for the sales shortage. Is Walmart finally hitting it’s plateau in how much it can grow? Is stiff competition from dollar stores and other competitors causing it to change from it’s original business model? Is the end of the big box store coming soon to a theatre near you? Has Walmart overgrown and following the footsteps of the likes of Blockbuster Video, Circuit City, Kmart, Sears, Borders and Krispy Kreme? How will the steep inflation being encountered in countries like China (where Walmart imports the most from) affect their ability to remain profitable and competitive? Only time will tell but this story is looking all too familiar.