Economic news you can use

There are several noteworthy milestones to note tonight.  Follow the links for more information.

In terms of our general economic malaise:

  • US spot foodstuff prices have so far risen 19% in 2014.  That’s right – 19%.  As Zero Hedge put it:  “…what happens when pent-up demand (from a frosty east coast emerging from its hibernation) bumps up against a drought-stricken west coast unable to plant to meet that demand?”  And I’d like to know what this is going to do to the rate of inflation this year.  Oh, yes – silly me.  The government doesn’t include food prices in its inflation calculations.  Therefore, if you find you can’t afford to buy as much food as usual, that’s not inflation – just your imagination.
  • Open Books has calculated that US corporations received well over a trillion dollars from the US government – possibly closer to two trillion – during the past decade or more.  They called it ‘a corporate welfare state’.  Much of it was in the form of subsidies, grants and tax concessions – ‘crony capitalism‘ at its finest.  Yet another reason why the US budget deficit is so enormous.
  • Wal-Mart has revealed (perhaps inadvertently) that reductions in the food stamp program and other welfare payments will directly impact its bottom line.  Interesting to note how a major company is actually dependent on the welfare system to make a profit.  That seems like yet another fertile breeding ground for crony capitalism, if you ask me . . .
  • Yield premiums for US distressed or high-risk debt – what used to be called ‘junk bonds’ and similar investments – have risen to a five-year high.  In other words, there are fewer buyers for such debt, making it much more difficult to ‘roll it over’ by renewing it or replacing it with new debt.  Those investors that are still in the market are much more cautious, demanding a better return on their investment – in effect, a higher interest rate – to offset their risk exposure.  Zero Hedge calls this another ‘canary in the coal mine‘ indicator of the health of the US economy as a whole.  I agree.
  • As an adjunct to the point above, the Sovereign Man blog notes that the USA is “now spending 26% of available tax revenue just to pay interest” on the Federal Government’s debt.  As bond rates increase, that will go up . . . and the prospect of default will loom ever larger, making US debt even more high-risk and driving away prospective buyers.  It’s a vicious circle, and it’s happened before – the article provides examples.
  • Pending sales of existing homes in the USA have declined for the eighth consecutive month.  So much for the ‘recovery’ in the housing market.
  • China has just experienced a 3-day run on the banks in one rural constituency.  It’s been contained – for now – but I have little doubt it’ll be the first of many as that country’s credit crunch tightens.

Apart from general economic news, with Tax Day approaching there’s a lot of discussion about our broken tax system.

  • Zero Hedge offers a list of 97 taxes Americans pay every year.  It notes:  “Our politicians have become extremely creative in finding ways to extract money from all of us, and most Americans don’t even realize what is being done to them.  By the time it is all said and done, a significant portion of the population ends up paying more than half of what they earn to the government.  That is fundamentally wrong, but nothing will be done about it until people start demanding change.”
  • The Economic Collapse Blog lists ‘24 Outrageous Facts About Taxes In The United States That Will Blow Your Mind‘.  They certainly blew mine!

Finally – and of very great interest considering the monstrosity that is Obamacare – the Fiscal Times reports that “there‚Äôs an increasing trend in the industry toward cutting insurance companies out of the process entirely, as large, regional hospital systems move into the insurance business“.  This is a noteworthy development.  If such institutions can cut out the middlemen who currently consume as much as one-quarter to one-third of all medical expenditure in the form of administrative overhead, it should make medical care considerably more affordable for most of us.  Of course, it’ll also have a very detrimental impact on those who depend on the current medical insurance system for their livelihood.  I’m going to watch this one closely.

Peter

3 comments

  1. I'm not at all surprised Walmart would see reduced profits if government aid to the poor was reduced. Walmart is often the only store that poor people shop at, and if they have less money to shop then certainly Walmart would see reduced revenue.

    Which part of that is shocking? That poor people buy things? That poor people shop at Walmart?

  2. Keep your eye on the future of healthcare systems–hospitals cutting out middlemen is happening more than you would think.

    Hospitals are also gobbling up nursing homes and extended care facilities. It is my understanding that if you are admitted to the hospital for the same diagnosis within 30 days, the second time your admission and treatment will not be reimbursed. However, if you are in a hospital based nursing home, it's just a transfer between facilities.

    Understand that the health care system has some sharp people working on all the angles.

  3. I have mixed feelings about point 2. No company pays taxes, they pass that on to the consumer (what a scam by politicians; unlimited taxes on the uneducated public). I wouldn't care one bit about it if it wasn't Obama-style crony capitalism with kickbacks to the Party, because that would mean (because of competition) lower prices.
    Chanting 'corporate welfare' should be left to the Occupiers. Tax write-offs, depreciation and much more is a good thing. For example, when Obama was pandering about 'bail-outs for the oil companies'? They were taking the same write-offs that his Solyndra buddies were taking, and my dad with his little country store.
    All this economic stuff is bad, but what will kill this country is the lack of an informed populace.
    -bravokilo

Leave a comment

Your email address will not be published. Required fields are marked *