Between Opportunities
In 1970, S. Korea and Venezuela had a similar GDP. Venezuela had a huge advantage: the largest oil reserves in the world. But while S. Korea embraced capitalism, Venezuela embraced socialism. Korea is an economic miracle and Venezuelans are literally starving to death.… Read the rest
Jim Rickards is the Financial Threat and Asymmetric Warfare Advisor for the DOD and Central Intelligence and he recently reviewed a report by senior intelligence officials that estimated the greatest threats to the United States. At the top of the list was no Muslim terrorism (of any flavor), but instead, imminent economic collapse.
There are eight slides he used to drive this point home in a recent interview.
The first slide shows the declining impact of $1 of federal spending on the economy:
A lot could be said about that but the results are obvious. Fifty years ago the Feds could spend a dollar and it would generate $2.41 in economic value, while today, that $1 of spending results in only 3 cents of economic value. This is because of fraud, waste, abuse and spending money on programs that ensure votes rather than generate growth.
The velocity of money-the rate at which money moves through the economy-is also falling sharply.
We’re nearing a point not seen since the 1920s!
And the so called misery index, which measures a combination of inflation and unemployment, is worse than it was in the stagflation days of Jimmy Carter. Not if we rely on the manipulated government data, of course, but on the estimates by economists not on the government payroll.
These numbers are also worse than the Great Depression!
The Fed’s debt to capital ratio has gone up nearly 400%, from a pre-2008 high of 22 to 2 to a current ratio of … Read the rest
Although Microsoft no longer gets the gushing, media-fawning attention that Google, Facebook and some younger, more ‘hip’ tech companies do, it is still a gigantic, hugely profitable industry giant. Microsoft employs more than 130,000 people and has annual revenue of nearly $100 billion, profit margins of about 20% and their stock is up more than 21% since they named a new CEO in January. And yet, they’re laying off 18,000 people.
What’s up?
I think the leadership at Microsoft sees trouble on the horizon. They’re looking back at the last five years and all the money the Federal reserve has pumped into the economy, much of which has gone not to Main Street, but WallStreet, where it has been lent out to big companies (like Microsoft), who’ve used it to go on a mergers and acquisitions spending spree. Microsoft’s acquisition of Nokia is one such example.
In fact, there has been more than $700 billion dollars of mergers and acquisitions in the United States so far this year. That’s the most since the high-flying days before the 2008 Great Recession, and likely to set an all-time record by year’s end. Insiders will even admit that they’re taking advantage of inflated stock prices and virtually ‘free’ money to buy up weaker competitors.
So what’s the problem?
Microsoft’s massive layoffs, (despite great margins, fantastic sales growth and a soaring stock market), suggest management is worried about the future. They have good cause to worry, because the Fed has already hinted they are … Read the rest
