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Jobs Crisis Among Recent College Graduates
Education Trends
The ongoing unemployment crisis in this country has plagued Americans of all backgrounds and vocations looking to find a decently paying job in their field. But one demographic that has been hit particularly hard by unemployment is one that you might not expect. The Atlantic magazine reports that unemployment has been unusually rampant among recent college graduates. Specifically, they cite a report from the Associated Press that nearly 53% of recent college grads are either underemployed or out of a job altogether. Those are sobering statistics for current college students looking to graduate in the immediate future.
Graduated
When the Associated Press says that recent college students are underemployed, they mean that college students are taking jobs that they’re either overqualified for or those that don’t utilize the full range of their skills. A political science major may be working at a coffee shop, or advertising major may have chosen a job in retail over unemployment. But some graduates can’t or won’t find employment in lower skilled jobs—the Associated Press reports that nearly 750,000 graduates have no job prospects. In other words, a lot of young people are making hard choices about the immediate future of their careers. Continue reading
European debt crisis
European Debt Crisis:
Portugal’s Bailout, One Year Later — Were You Prepared in Advance?
Many analysts had opinions before the bailout, but no one was talking about the most important indicator
Make no mistake: The stakes for financial and economic survival in Europe are high. Seemingly everyone — from investment bloggers to financial television hosts — has something to say about the European debt crisis.
But with so many divergent opinions to choose from, which ones should you trust? Continue reading
US Financial System: Is It Finally Stable?
US Financial System: Is It Finally Stable?
Bernanke comments raise questions about banks
Four years after we brushed up against “financial Armageddon,” did you think you’d be reading this?
Federal Reserve Chairman Ben Bernanke said…banks need to have more capital at hand in order to ensure the financial system is stable. Bernanke said regulators were taking steps to force financial institutions to hold higher capital buffers…
- Reuters, April 9
It appears our financial system is still not as stable as it needs to be. But guess who relaxed the banking system’s “capital buffers” in the first place? Continue reading
So Long, US Dollar As World’s Reserve Currency
So Long, US Dollar
By Marin Katusa, Casey Research
There’s a major shift under way, one the US mainstream media has left largely untouched even though it will send the United States into an economic maelstrom and dramatically reduce the country’s importance in the world: the demise of the US dollar as the world’s reserve currency.
For decades the US dollar has been absolutely dominant in international trade, especially in the oil markets. This role has created immense demand for US dollars, and that international demand constitutes a huge part of the dollar’s valuation. Not only did the global-currency role add massive value to the dollar, it also created an almost endless pool of demand for US Treasuries as countries around the world sought to maintain stores of petrodollars. The availability of all this credit, denominated in a dollar supported by nothing less than the entirety of global trade, enabled the American federal government to borrow without limit and spend with abandon.
The dominance of the dollar gave the United States incredible power and influence around the world… but the times they are a-changing. As the world’s emerging economies gain ever more prominence, the US is losing hold of its position as the world’s superpower. Many on the long list of nations that dislike America are pondering ways to reduce American influence in their affairs. Ditching the dollar is a very good start. Continue reading
Invest in Structured Bonds?
By Tim McMahon, editor
What Are Structured Bonds?
First let’s look at what makes up a bond. A bond is a form of debt where a company borrows money from investors and has a certain expiration date called a “Maturity Date”. The interest rate that the company pays is called the “coupon rate.” One advantage of a bond over a stock is that a bond is a debt so bondholders are “creditors”.
In the event of corporate bankruptcy bondholders go to the head of the line while shareholders as owners go to the back of the line and only get whatever is left over (if anything) once all the creditors (including bond holders) are satisfied.
In an effort to lower the interest rate they had to pay to investors companies started offering “convertible bonds.” Thus a convertible bond has all the security benefits of a bond with some of the upside potential of stocks.
A convertible bond has the option to be able to be converted into stock if the price of the stock rises high enough. In this way, investors were not only lenders to the company but could also participate in the growth of the company as shareholders. In exchange for this added potential gain the bondholders were given a lower interest rate, i.e. the “Coupon rate” is lower on a convertible bond than on a similar standard bond.
Structured bonds are based on the idea of convertible bonds. In an effort to add even more flexibility and additional features including higher yields, lower risk or a variety of other features, investment banks started ‘slicing and dicing’ traditional bonds in a variety of ways creating derivatives called structured bonds.
Two Forms of Structured Bonds
There are two basic forms of structured bonds Continue reading
European Central Bank: “Great White Fear” Takes A Bite Out of Recovery
EWI’s Global Market Perspective foresaw the shift in European banks from lenders to savers via one remarkable chart
It’s been over two years since the European Central Bank began its open-heart surgery of the eurozone’s anemic economy. So far, the procedure has included an unprecedented $3 trillion-plus in bailouts, monetary transfusions, AND toxic debt transplants.
Yet, according to a recent slew of discomforting news reports, the economies across the pond would still flatline in seconds without constant life support. Here, an April 18, 2012, Wall Street Journal writes:
“Europe Hemorrhages through Refinancing Operation Band-Aid” and reveals that Europe’s banking sector has wolfed down three years of Long Term Refinancing Operations (LTROs) in under four months.
The question is — what went wrong? Continue reading
This Gold Market
Why I’m Excited About This Gold Market
After a reasonably long period of sustained and occasionally dramatic escalations, commodity markets in general, and precious metals markets in particular, have declined. This is normal and healthy behavior, even if it is uncomfortable for some market participants. Readers with a long memory will remember the 1970s gold bull market, where the gold price advanced from $35 to $850 per ounce – though in 1975, in the middle of that epic bull market, the gold price declined by 50%. While a 50% decline is a near-religious event for many market participants, particularly those on margin, it is instructive to note that at the bottom of the retrenchment the gold price was up threefold from its $35 low, and that gold went on to increase eightfold in price after the bull market resumed. It is thus important to recognize that cyclical retrenchments are a normal and healthy feature of a secular gold bull market.
Readers should consider whether the reasons for the gold market are intact. Has gold’s decline made it more likely that sovereign debts can be serviced or that unfunded obligations can be met? Does it mean that insolvent banks are now healthy? Does it mean that creating trillions of unbacked dollars and euros and renminbi will have no consequences? Of course not. We are simply uncomfortable with volatility.
Gold’s Current Weakness
Let’s examine some factors that may have contributed to gold’s current weakness and think about the probabilities of those factors contributing to further weakening in the gold price. Continue reading
World-Wide Marginal Tax Rates
How does the U.S. Tax Rate compare with other countries?
Recently the people at Turbo-Tax created a great “info-graphic” comparing world-wide marginal income tax rates so we can see where we stand.
According to Wikipedia
A marginal tax rate is the tax rate that applies to the last unit of currency of the tax base (taxable income or spending)
In other words the marginal tax rate is the rate you will pay on the next dollar you earn. It doesn’t include other taxes like state taxes, sales taxes, property taxes etc. Based on this chart the U.S. compares pretty favorably on a tax rate basis when compared to other developed countries.
Sociopathy Is Running the US – Part Two
By Doug Casey, Casey Research
I recently wrote an article that addresses the subject of sociopaths and how they insinuate themselves into society. Although the subject doesn’t speak directly to what stock you should buy or sell to increase your wealth, I think it’s critical to success in the markets. It goes a long way towards explaining what goes on in the heads of people like Bernie Madoff and therefore how you can avoid being hurt by them.
But there’s a lot more to the story. At this point, it seems as if society at large has been captured by Madoff clones. If that’s true, the consequences can’t be good. So what I want to do here is probe a little deeper into the realm of abnormal psychology and see how it relates to economics and where the world is heading.
If I’m correct in my assessment, it would imply that the prospects are dim for conventional investments – most stocks, bonds and real estate. Those things tend to do well when society is growing in prosperity. And prosperity is fostered by peace, low taxes, minimal regulation and a sound currency. It’s also fostered by a cultural atmosphere where sociopaths are precluded from positions of power and intellectual and moral ideas promoting free minds and free markets rule. Unfortunately, it seems that doesn’t describe the trend that the world at large and the US in particular are embarked upon.
In essence, we’re headed towards economic and financial bankruptcy. But that’s mostly because society has been largely intellectually and morally bankrupt for some time. I don’t believe a society can rise to real prosperity without a sound intellectual and moral foundation – that’s why the US was so uniquely prosperous for so long, because it had such a foundation. And it’s also why societies like Saudi Arabia will collapse as soon as the exogenous things that support them are pulled away. It’s why the USSR collapsed. It’s the reason why countries everywhere across time reach a peak (if they ever do), then stagnate and decline.
This isn’t a matter of academic contemplation, for the same reason that it doesn’t matter much if you’re in a first-class cabin when the ship it’s in is taking on water. Continue reading
U.S. Healthcare Trends- Young Docs Not Optimistic
In March 2012, the Physicians Foundation surveyed 500 physicians aged 40 or younger. 250 were primary care physicians, 175 were Surgical specialists and 75 were hospital based specialists. The typical physician in the survey was 37 years old and employed by a medical group. You would expect these young physicians to be on top of the world, they’ve finished medical school and have promising well-paid careers. Interestingly, however, that is not the case. According to the survey,
These physicians are markedly pessimistic regarding the future of the U.S. healthcare system, with the “new healthcare legislation” ranking as a strong #1 reason for the pessimism. Many voice considerable cynicism with (what several call) government’ involvement.
Will future headlines read:
14,000 seniors with cancer DIE every year because they’re refused life-saving treatments?
