I have been telling you for months that the government and BP is lying about the toxic effects of the oil spill and the chemical dispersant. I would be scared if I lived anywhere close to the Gulf.-Lou
Blood Tests Show Elevated Level of Toxic Hydrocarbons in Gulf Residents
Homeless Upset About McDonald’s Dollar Menu Increase
CANVAS STAFF REPORTS – Unhappy meals have arrived at a McDonald’s in San Francisco.
Homeless people who hang out at the nearby Golden Gate Park used to get 99-cent burgers at the McDonald’s located at Haight and Stanyan streets in the Haight-Ashbury neighborhood.
But the eatery got rid of its Dollar Menu about a month ago. That move, which McDonald’s called a simple business decision, means items on the menu are now too expensive for the people who spend much of their day hanging out on the sidewalk in front of the restaurant.
Items on the Dollar Menu now cost around $1.50.
“I eat less. I have to get more money,” said 29-year-old Nicholas Newhart to The San Francisco Chronicle . He was not happy with the price increase and said, “If I don’t have a dollar and I want food, I just end up going to a trash can.”
Homelessness has been a problem in San Francisco for decades. Tension between business owners and homeless people who hang out on sidewalks in front of their stores and offices has prompted Mayor Gavin Newsom and some Haight Street merchants to support a ballot measure in November that would ban sitting or lying on public sidewalks, The Chronicle reported.
Some homeless people think the more expensive menu is the next logical step in the crackdown, though the move does not affect other McDonald’s in the city.
“That means that the Dollar Menu is a hoax, a fraud, a phony,” Blake Edwards told KGO-TV .
Franchise owner Natalie Gonzales said the speculation as to why she raised prices at her restaurant at Haight and Stanyan streets is “absolutely false.”
“This was a business decision based on a number of contributing factors,” she said.
Customer demand and other factors often lead to franchise owners changing the prices of certain menu items, said Julie Wenger, marketing director for McDonald’s Pacific-Sierra Region.
Here is an exerpt from my book “The Financial Physician: How To Cure Your Money Problems and Boost Your Financial Health”. This chapter excerpt details how American’s feelings of material entitlement has ruined the financial health of the avergage American Family. Get your copy of the book here for only $10.19.-Lou
FEELINGS OF MATERIAL ENTITLEMENT
When I was growing up, my parents, my five siblings and I lived in a small house. Although our quarters were close, we made it work. Our family had one car, which we kept until it died. Every night we all sat down for dinner together. On the rare occasions we ate out, it was to celebrate a special event. When I was a kid, we took only one vacation — we all got in the car and drove to Niagara Falls.
Money was always tight, so our family lived frugally and watched what we spent. My parents only bought what we needed. We didn’t have credit cards so we had to live within our means. When we wanted to buy something for ourselves, we frequently had to save for it, which took a while, or we bought it “on time.”
Today, people live totally differently; they have a different attitude. They’re driven by feelings of material entitlement. They believe that they deserve to live extravagant lifestyles — the type of lives they see in the movies, magazines, advertisements and on television, which most of them can’t afford. To get what they think they deserve, they spend all they have, erode their savings and plunge into debt. They live in a culture of credit.
People today are also impatient and unwilling to wait. Since they won’t hold off until they can afford what they want, they put it on plastic, on their credit cards. By feasting today, they risk starving tomorrow.
At no time in history have any people lived as we Americans have been living for the past 30 years. We have acted as if we were extraordinarily wealthy people with unlimited funds and buying power. Now that we are in an economic downturn, millions are paying a steep price for living the high life and with such abandon.
DIAGNOSIS
Buying material goods and living extravagantly is expensive and as a result, people don’t build their net worth. They get into unhealthy patterns in which they’re constantly pressed for funds. Many live from paycheck to paycheck, don’t save or invest and are mired in debt.
Easy credit has been a major culprit. It helped create a culture in which millions of people were encouraged to live beyond their means. The credit industry preyed on their feelings of material entitlement and insistence on immediately getting what it took their parents years to acquire.
I’ve seen a number of recent college grads driving luxury cars that took their parents decades to afford. Car by car, their parents worked their way up the auto chain, progressively buying nicer and more expensive vehicles. However, right off the bat, these young people buy or lease brand new luxury models. As I point out in Ch 18, Wasting Money on A Lifetime of Cars, buying expensive new cars is a costly financial mistake.
Because they have feelings of entitlement, people use credit to purchase what they can’t afford. And the use of credit is the main reason why people fail financially.
VITAL SIGNS
The typical symptoms of feelings of material entitlement include:
Tom, an unskilled laborer bought a $1,000,000 McMansion. It was far more space than he, his wife and two kids needed. Tom told me that he worked hard and felt that he “deserved to live rich.” Within a year after buying his palace, Tom could not meet his mortgage payments, his loan was foreclosed and he lost his home.
Unfortunately, Tom’s experience is common; it happens every day throughout the US. The fact that so many people purchased homes they couldn’t afford was a major cause of our present financial crises; it helped bring our financial institutions to their knees. Those who believed that they were entitled to live beyond their means continued their reckless spending and never stopped to think the bubble might burst.
Listen to this week’s “The Financial Physician” radio shows on both WOBM and Talk Radio XM 165.
There will be no improvement in the economy until housing turns around, It was housing that got us into this mess and it will be housing that gets us out. You would think that record low mortgage rates would support the market but if people are afraid of losing their job or are already without one they are not going to make a commitment to buy a home.-Lou
Sellers Cut Prices on 50% of Homes
Homeowners are slashing prices more drastically and more frequently, according to recently released data from ZipRealty. The average price reduction is now 7.1 percent of list price.
List prices dipped about $19,000 in August compared with July, across the 26 markets studied. On average, sellers made two price cuts during that time.
Seven cities saw price reductions on more than half of their inventory, with Jacksonville, Phoenix and Minneapolis on top with 55 percent, 54.4 percent and 52.4 percent, respectively.
“Earlier in the year we saw sellers being aggressive with their pricing, but not reducing as much,” says Leslie Tyler, vice president of marketing for ZipRealty. “What we are seeing now is that the trends are reversing.”
With the seeming desperation of home sellers, and the continued drop in mortgage rates, buyers are in a very good position. But the plunging rate at which buyers are applying for mortgages tells a different story, which might explain sellers’ attitudes.
The next closest contender was Baltimore, with a 9.6 percent reduction in price that amounted to a median $19,000 dip. San Francisco, whose median list price fell the furthest of all, down $35,000, actually had the fewest number of reductions per listing, at 1.76 on average. No city cut their prices three times or more, but Chicago and Phoenix tied for first in the highest number of average reductions per listing: 2.43.
Texas sellers made the smallest price cuts, with a median price cut of only $10,000 in Houston and Dallas. The Raleigh-Durham, N.C. area was a close third with $10,100.
With mortgage rates at record lows, it’s not a bad time to consider buying.
Obama calling for more infrastructure spending
WASHINGTON (AP) – Vowing to find new ways to stimulate the sputtering economy, President Barack Obama will call for long-term investments in the nation’s roads, railways and runways that would cost at least $50 billion.
The infrastructure investments are one part of a package of targeted proposals the White House is expected to announce in hopes of jump-starting the economy ahead of the November election. Obama will outline the infrastructure proposal Monday at a Labor Day event in Milwaukee.
While the proposal calls for investments over six years, the White House said spending would be front-loaded with an initial $50 billion to help create jobs in the near future.
The goals of the infrastructure plan include: rebuilding 150,000 miles of roads; constructing and maintaining 4,000 miles of railways, enough to go coast-to-coast; and rehabilitating or reconstructing 150 miles of airport runways, while also installing a new air navigation system designed to reduce travel times and delays.
Obama will also call for the creation of a permanent infrastructure bank that would focus on funding national and regional infrastructure projects.
Administration officials wouldn’t say what the total cost of the infrastructure investments would be, but did say the initial $50 billion represents a significant percentage. Officials said the White House would consider closing a number of special tax breaks for oil and gas companies to pay for the proposal.
Obama made infrastructure investments a central part of the $814 billion stimulus Congress passed last year, but with that spending winding down, the economy’s growth has slowed. Officials said this infrastructure package differs from the stimulus because it’s aimed at long-term growth, while still focusing on creating jobs in the short-term.
In a Labor Day interview on CBS’”Early Show,” Labor Secretary Hilda Solis said the plan Obama was to unveil Monday would “put construction workers, welders, electricians back to work … folks that have been unemployed for a long time.”
With the unemployment rate ticking up to 9.6 percent, and polls showing the midterm elections could be dismal for Democrats, the president has promised to unveil a series of new measures on the economy.
In addition to Monday’s announcement in Milwaukee, Obama will travel to Cleveland Wednesday to pitch a $100 billion proposal to increase and make permanent research and development tax credits for businesses, a White House official said.
While the idea is popular in Congress, coming up with offsetting tax increases or spending cuts has been a stumbling block. Similar to his proposal to pay for the infrastructure investments, Obama will ask lawmakers to close tax breaks for oil and gas companies and multinational corporations to pay for the plan.
Other stimulus measures the administration is considering include extending a law passed in March that exempts companies that hire unemployed workers from paying Social Security taxes on those workers through December. Sen. Chuck Schumer, D-N.Y., has proposed extending the exemption an additional six months.
Obama is also continuing to prod the Senate to pass the small business bill that calls for about $12 billion in tax breaks and a $30 billion fund to help unfreeze lending. Republicans have likened the bill to the unpopular bailout of the financial industry. And the president wants to make permanent the portion of George W. Bush’s tax cuts affecting the middle class.
Wary of the public’s concern over rising deficits, the administration insists a second stimulus plan, similar to last year’s $814 billion bill, is not in the works.
Nouriel Roubini is one of the few economists who forecasted the financial crisis, his opinions should be taken seriously.-Lou
More than 400 US Banks Will Fail: Roubini
Even if the US and European economies manage to avoid a double dip, it will still feel like a recession, while more than half of the 800-plus US banks on the “critical list” are likely to go bust, according to renowned economist Nouriel Roubini of Roubini Global Economics.
The second half of the year will remain weak as tailwinds become headwinds, Roubini told CNBC on the shores of Lake Como, Italy at the Ambrosetti Forum economics conference.
“In the second half, fiscal policy becomes a headwind, no more cash for clunkers,” Roubini said. “The positive scenario is that growth will be below par.”
Roubini recently said the chance of a double-dip recession in the US was now more than 40 percent.
“The big risk is that there will be a downturn in markets that could impact the bond, the equity and the credit markets,” he said.
“Job losses have been higher, the US jobs number will show that. There is no private sector jobs growth,” he said. “Consumption is weak, exports are weak and housing is weak.”
“If there is no final sales and no final demand, companies will not invest,” he added.
New Normal Coming and More Banks Will Fail
Roubini said he believes hopes of decoupling will be dashed as the slowdown in the US impacts China, Japan and the euro zone.
“In Europe, Germany is strong but the rest of the continent is pretty dismal,” he said. “The rest of the world cannot cope without the prop of the US consumer. Chinese growth in the second half will be 7 percent.”
“Get used to it,” Roubini said. “Deleveraging has to continue as governments and consumers deleverage in the developed world.”
How about some good news for a change? The stock market ended August almost 5% lower for the month as economic numbers point to a double dip recession. As the week progressed the market was encouraged by weak economic numbers because they were not as horrible as had been expected. The Dow closed up 2.9% for the week and the S%P and NASDAQ did even better up 4%. The week before Labor Day is notoriously slow with low volume, let’s see how the market performs when investors return from summer vacations. Regardless of the thin volume, I’m impressed with the market’s move this week, it may continue for a couple of more weeks but a I still believe a big drop is coming this fall when economic realities make themselves evident.-Lou
Stocks close higher on jobs optimism
Dow up 2.9% for week, turns positive for year
NEW YORK (MarketWatch) — Investors pushed stocks up for the fourth day in a row, sailing into the long weekend on a high note as an encouraging jobs report sent stocks to their best pre-Labor Day week in two decades.
The Dow Jones Industrial Average finished up 127.98 points, or 1.24%, to 10447.93, putting the Dow up 2.9% on the week — its first positive weekly showing since the beginning of August. The Dow also edged back into positive territory for the year.
S&P 500 1Year
Impressive chart action
The market leaped after nonfarm payrolls data showed jobs slowing at half the rate predicted by economists. The Labor Department said the U.S. lost 54,000 jobs last month, about half of what economists had expected and matching the level of revised losses recorded the previous month.
The unemployment rate, calculated using a separate household survey, edged up to 9.6%, as expected, from 9.5% for the previous two months.
In the last two weeks or so, things have been starting to firm up, and today’s jobs numbers really put an exclamation mark on that,” said Phil Orlando, equity strategist at Federated Investors. “We’re feeling a lot more comfortable about our view, than those thinking about a double dip.”
Orlando predicted that stocks would pick up after Labor Day, as vacationing money managers return to an economy whose outlook has improved.
“If you had a bearish bent in the middle of August when you went on vacation, the story seems different today — it seems constructive,” he said.
Not everyone was impressed. Bob Browne, chief investment officer at Northern Trust Global Investments, said the addition of new private-sector jobs is “not enough to absorb new entrants into the work force let alone put the unemployed from the past few years back to work,” adding: “We have a long way to go.”
But even slowing job losses was “enough to give us a catalyst on a light day going into a long weekend,” he said.
The BLS birth/death model added a phantom 115,000 jobs to the August Job report thus making it seem better than expected. This is the estimation of jobs created by the establishment of new small businesses. I don’t know about you, but I don’t see a lot of new businesses being established (Birth) but I see many closing (Death). This is a fudged number pure and simple. The unemployment rate rose to 9.6% and U-6 (taking into account discouraged and part time workers) jumped to 16.7%. The economy needs to create 150,000 jobs /month just to keep pace with population growth. Celebrating a loss of 54,000 is absurd but that is what the stock market is going this morning as a worse number was priced in.-Lou
August Total Non Farm Payrolls Come At -54K On Consensus Of -105K, Unchanged From July, Unemployment Rate 9.6%, Birth Death Adds 115K
Private payrolls come in at +67K as Birth Death adds 115K, compared to just 6K previously, as U-6 rises from 16.5 to 16.7%, highest since April. Total Part time workers (all industries) increased by 401k from 18,157 to 18,558; part time workers for economic reasons increased by 331K. Workweek unchanged month over month at 34.2 hours, with average hourly earnings up slightly from 0.2% to 0.3%. 42% of the unemployed were out of a job for 27 weeks or longer, compared to 44.9% previously; average duration of unemployment at 33.6 weeks.
From the release:
Nonfarm payroll employment changed little (-54,000) in August, and the unemployment rate was about unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today. Government employment fell, as 114,000 temporary workers hired for the decennial census completed their work. Private-sector payroll employment continued to trend up modestly (+67,000).
The number of unemployed persons (14.9 million) and the unemployment rate (9.6 percent) were little changed in August. From May through August, the jobless rate remained in the range of 9.5 to 9.7 percent. (See table A-1.)
Among the major worker groups, the unemployment rate for adult men (9.8 percent), adult women (8.0 percent), teenagers (26.3 percent), whites (8.7 percent), blacks (16.3 percent), and Hispanics (12.0 percent) showed little change in August. The jobless rate for Asians was 7.2 percent, not seasonally adjusted. (See tables A-1, A-2, and A-3.)
The number of long-term unemployed (those jobless for 27 weeks and over) declined by 323,000 over the month to 6.2 million. In August, 42.0 percent of unemployed persons had been jobless for 27 weeks or more. (See table A-12.)
In August, the civilian labor force participation rate (64.7 percent) and the employment-population ratio (58.5 percent) were essentially unchanged. (See table A-1.)
This is the first big default in the municipal bond market. If you are invested in municipal bonds make sure you are well diversified, better yet, use ETFs and mutual funds to maximize your diversification. In my opinion, the municipal bond market has never been more risky. I have italicized the most important part of the article.-Lou
Bankruptcy on horizon for Pennsylvania capital
Washington Post Staff Writer
Thursday, September 2, 2010
The city of Harrisburg has said that it will not make a $3.3 million municipal bond payment due in two weeks, a decision that could move the Pennsylvania capital closer to bankruptcy.
The city’s decision, announced in a letter dated Monday, is highly unusual because it saves a relatively small sum of money while compromising Harrisburg’s ability to restructure its overwhelming debt and raise money in the future.
“This shows that the city is failing to function,” said Matt Fabian, managing director of Municipal Market Advisors, a Massachusetts-based research firm. “Now it seems that a municipal bankruptcy filing is almost a foregone conclusion.”
The number of fiscally troubled municipalities, such as Harrisburg, is small but increasing. But Fabian said the pain and stigma of bankruptcy are simply too great for most local governments.
Harrisburg Mayor Linda D. Thompson has adamantly opposed declaring bankruptcy, while the move has been been advocated by the city controller and a growing bloc on the City Council.
“Her view on bankruptcy hasn’t changed,” said Chuck Ardo, the mayor’s spokesman. “She still believes it should be the last option rather than the first. There are some members of council and city comptroller who view it as a silver bullet. But we think it is little more than a can of worms.”…….
……Traditionally, municipal bonds have been seen as safe for investors because municipalities, which can raise taxes, almost never default.
But with local governments increasingly under fiscal stress since tax revenues declined during the recession – which came after a borrowing binge – there is some concern that more hard-pressed governments will choose to skip payments.
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