China has surpassed the US in terms of GDP based on purchasing power parity (PPP), becoming the largest in the world by this measure, International Monetary Fund estimates show.
In 2014 China reached $17.6 trillion or 16.48 percent of the world’s purchasing-power-adjusted GDP, while the US made slightly less, 16.28 percent or $17.4 trillion, the FT reported citing IMF data.
PPP is recognized as the best way to compare the size of economies rather than using volatile exchange rates, which rarely reflect the true cost of goods and services. Thus a trillion US dollars are worth a lot more in China than in the US.
On the purchasing power basis, China is overtaking the US right about now and becoming the world’s biggest economy, according to the forecast.
The US has been the global leader since overtaking the UK in 1872. Most economists previously thought China would pull ahead in 2019.
According to IMF estimates, in 2015 the gap between China and the US will increase to almost a trillion dollars: Chinese GDP PPP will amount to $19.23 trillion against $18.286 trillion in the US.
However in terms of a real GDP the United States remains the undisputed world leader with $16.8 trillion output, significantly outpacing China with $10.4 trillion.
Euro zone business growth is the weakest this year
Euro zone business growth is the weakest this year. Unemployment rate dropped to 5.9% as the labor participation rate drops to a 36 year low. US housing prices are rolling over. The US Government is pushing the fear on Ebola to remove the peoples rights. An additional 1,000 troops is now being sent to Liberia bringing to the total to 4,000. U.S. Government admits they are funding the protests in Hong Kong. The people in the middle east are taking their countries back and the U.S. waived the sanctions for children in the armed forces to issue these countries millions of dollars. Turkey just voted for a buffer – no – fly – zone exactly what the U.S. wanted.
US labor force continues its transition from first world to third world
by PAUL CRAIG ROBERTS | INFOWARS.COM | OCTOBER 3, 2014
The Bureau of Labor Statistics headline this morning reads: “Payroll employment increases by 248,000 in September; unemployment rate declines to 5.9%.”
How can this be? As I reported yesterday, US corporations are investing in buying back their own stocks, not in new business ventures that produce new jobs. http://www.paulcraigroberts.org/2014/10/02/poverty-report-contradicts-gdp-claims-paul-craig-roberts/
According to the Census Bureau’s Poverty Report, US real median family income has declined to the level of twenty years ago. http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf
Consumer credit and real retail sales are not growing. Construction is limited to rental units. Construction shows 16,000 new jobs, half of which are “specialty trade contractors” or home remodelers.
The payroll jobs report lists 35,300 new jobs in retail trade. How is this possible when J.C. Penny’s, Macy’s, Sears, and the dollar store chains are in trouble and closing stores, and shopping centers are renting space by the day or hour?
At a time when there is a surfeit of office buildings and only 500 new jobs in “heavy and civil engineering construction,” the jobs report says 6,000 new jobs have been created in “architectural and engineering services.” What work are these architects and engineers doing?
The 4,900 computer systems jobs, if they exist, are likely short-term contracts from 6 to 18 months. Those who have the jobs are not employees but “independent contractors.”
The payroll jobs report gives an unusually high number–81,000–of “professional and business services” jobs of which 60,000 are “administrative and waste services,” primarily “temporary help services.”
“Health care and social assistance” accounts for 22,700 of the new jobs, of which 63 percent consist of “ambulatory health care services.”
“Performing arts and spectator sports” gave the economy 7,200 jobs, and 20,400 Americans found employment as waitresses and bartenders.
State governments hired 22,000 people.
Let’s overlook the contribution of the discredited “birth-death model” which overstates on average the monthly payroll jobs by at least 50,000, and let’s ignore the manipulation of seasonal adjustments. Instead, let’s assume the numbers are real. What kind of economy are we looking at?
We are looking at the workforce of a third world country with the vast bulk of the jobs in low-pay domestic service jobs. People working these part-time and independent contractor jobs cannot form a household or obtain a mortgage.
As John Titus, Dave Kranzler and I have shown, these jobs are filled by those aged 55 and over who take the low paying jobs in order to supplement meager retirement incomes. The baby boomers are the only part of the US labor force whose participation rate is rising. http://www.paulcraigroberts.org/2014/09/04/lie-serves-rich-roberts-titus-kranzler/ Of the claimed new jobs in September, 230,000 or 93 percent were jobs filled by those 55 and older. Employment of Americans of prime working age (25-54) declined by10,000 jobs in September from the August level. http://www.bls.gov/news.release/empsit.t09.htm
As the US labor force continues its transition from first world to third world, real median family income will continue to decline. Ladders of upward mobility will continue to be dismantled, and income and wealth will continue to concentrate in the pockets of the One Percent. America is truly a country run for the few.
How many Americas can deal with another six years of middling economic performance?
September 25, 2014 – While the restUS-POLITICS-CONGRESS-CONFIRMATION-YELLEN of the world hung on Janet Yellen‘s every word last week for news of the future of the Federal Reserve‘s policy of quantitative easing, her real bombshell came at the end of her press conference and was largely ignored by the media who had rushed to release their pre-written narratives. According to Yellen: “So the story is, it is not that the Fed is behind the curve in failing to return the funds rate to normal levels when the economy is recovered. It is rather that in order to achieve such a recovery in 2016 or by the end that it is necessary and appropriate to have somewhat more accommodative policy than would be normal in the absence of those headwinds.” [Emphasis mine.]
The media and Wall Street, in their hope for eternal quantitative easing, focused on Yellen’s comments about accommodative monetary policy and how it might take until the end of the decade for the Fed to shrink its balance sheet back to normal levels. They ignored the above statement, coming as it did near the end of the press conference, that acknowledged that the economy has not yet recovered. Six years of Federal Reserve intervention, nearly $4 trillion of balance sheet expansion, and a 45% increase in the money supply (M2 & MZM), and the Fed is hoping that the economy might recover two years from now? How many more trillions of dollars will be doled out to Wall Street before the Fed admits that it has hurt, not helped, the recovery?
Yellen’s statement also requires a bit of parsing. When she said “in 2016 or by the end,” did she mean by the end of 2016 or by the end of the decade? Given her view that full policy normalization won’t occur until the end of the decade, the latter interpretation would not be at all surprising. This would mean that the Fed believes that we are still at best only at the halfway point toward economic recovery. The last financial crisis recovery that took that long was the recovery from the Great Depression, in which the economy really didn’t return to normal until after World War II. How many American households can deal with another six years or more of middling economic performance?
More importantly, Yellen’s admission of non-recovery belies all of her previous statements about the rosy condition of the economy and the job market. From now on, every time you hear someone from the Fed talking about how well the economy is doing, take it with a huge grain of salt. It is just a continuation of the Greenspan-Bernanke conduct of monetary policy via psychological manipulation, euphemistically referred to as “expectations management.” With one hand the Fed tinkers with the levers of monetary policy while with the other hand it holds the megaphone with which it announces that the economy is doing just fine, even if bubbles are beginning to burst all around.
The Federal Reserve’s thinking is that if it can convince people to believe that everything is alright then things actually will be alright. The power of positive thinking only goes so far, however. At some point it will run into the brick wall of economic reality. No amount of happy thoughts can overcome the reality that the Fed’s money creation is leading to rising prices and inflating asset bubbles. Positive thinking won’t find jobs for the unemployed and underemployed, nor will it put food on the table of families who are living from paycheck to paycheck. Expectations can only be managed so far, until people realize that they are being sold a bill of goods.
At that point, no amount of talk can turn the American people away from the conviction that the Fed is giving them the shaft. The Fed may imagine itself as Santa Claus, stuffing money down chimneys in an attempt to stimulate the economy, but the impoverishing effects of its inflationary monetary policy make it clear that it is more like the Grinch.
Debunks key claims about America’s response to global warming
9.24.2014 News Bradford Thomas
An Associated Press fact-check on President Obama’s climate change speech to the United Nations Tuesday accused the president of clearly spinning the facts and distorting the truth about America’s response to global warming.
The AP fact-checker faulted Obama “gloss[ing] over some inconvenient truths” in his global warming lecture Tuesday, particularly in regard to his claims about America’s attempts to clean up emissions at home and his insistence that emissions reductions do not have an impact on the economy.
The fact-check says that not only did Obama distort the numbers to claim that in the last eight years the U.S. reduced total carbon pollution “by more than any other nation on Earth”—Europe actually reducing theirs by a larger percentage in that time—Obama is hiding the fact that the U.S. has largely lowered those emissions by “sending dirty fuel abroad to pollute the same sky.”
THE FACTS: The U.S. is actually sending more dirty fuel abroad even as it takes steps to help other nations transition to cleaner energy. The U.S. has cuts its own coal consumption by 195 million tons in six years. But according to an AP analysis of Energy Department data, about 20 percent of that coal was shipped to power plants and other customers overseas. Emissions from that coal were not eliminated but rather moved to other countries. As well, the U.S. exported more products refined from oil — another dirty fuel — than it imported, starting in 2011.
Obama also tried to claim that we have been able to grow our economy while simultaneously cutting carbon emissions, “proving” there’s no conflict between combating global warming and growing the economy. The AP rips that claim apart, pointing to the Great Recession as the key factor in half of our so-called self-imposed reductions:
OBAMA: “So, all told, these advances have helped create jobs, grow our economy, and drive our carbon pollution to its lowest levels in nearly two decades — proving that there does not have to be a conflict between a sound environment and strong economic growth.”…
THE FACTS: About half of the 10 percent reduction in greenhouse gas emissions the U.S. has achieved in recent years can be attributed to the economic recession, not any specific actions from the Obama administration. Obama’s comments also left out that U.S. carbon emissions rose 2.9 percent from 2012 to 2013, the first increase since 2007, because higher natural gas prices spurred more coal use.
Another verifiably false statement by the president was that the Climate Action Plan “was working,” helping lower greenhouse gas emissions in 2012. Major problem: the plan was not even announced until June 2013.
THE FACTS: That plan has nothing to do with reductions in emissions in 2012 because it was not announced until June 2013. Moreover, two of its cornerstone regulations — controls on new and existing coal-fired power plants — are at this point just proposals. The administration isn’t expected to complete those rules until next year and some states may not submit plans until after Obama leaves office. The statement also leaves out the fact that in 2013, emissions in the U.S. rose for the first time since 2007.
Obama did invest in renewable energy and boost fuel economy before announcing the climate plan. But the plan can’t be credited with improving anything before it came into existence.
There is too much debt in the economy that cannot be serviced
by ERIC KING | KING WORLD NEWS | SEPTEMBER 23, 2014
“The key point is why it is unable to service this debt, which is declining traffic.
The Financial Times put it this way: “The fall in traffic volumes on U.S. roads since 2004 has undercut the financial assumptions behind a series of deals devised in the middle of last decade during an infrastructure investment boom.” Note that the FT mentions “U.S. roads” in the plural because what is happening in Indiana is not unique. It is happening across the United States.
The bankruptcy of this Indiana company confirms what a seven-year decline in gasoline sales is illustrating: People are driving less.
The key to interpreting what is happening with this road in Indiana is understanding the bigger picture. So is this decline, as the Financial Times says, because “economic and lifestyle changes have prompted people to use cars less”? Or is it just another clear indicator of a declining workforce driving fewer miles in a weak economy, which has also stretched consumer budgets so they are driving less?
I think the latter, particularly when considering the growth in population. The decline in gas sales no doubt reflects, in part, increased fuel efficiency. But if gas sales per person were illustrated when looking at the total population, the decline would be even more dramatic.
There is no doubt about it — Americans are driving less. This has reduced the country’s demand for gasoline. It has also reduced what governments take in each year from the gas tax. This is also an important point. The federal gas tax has not been raised since 1993. So declining fuel sales have brought the Highway Trust Fund — yet another government fund — to insolvency.
As the following chart shows, the US Department of Transportation is saying the fund is running out of money.
Now what does all of this have to do with the precious metals? Basically it underlies the key reason for owning physical gold and silver.
There is too much debt in the economy that cannot be serviced. This is what the creditors of this bankrupt Indiana company are finding out. The price of financial assets has been forced up by all this debt, which in turn is making gold and silver relatively cheap. It is this point that we should be focusing on after last week’s drubbing, as the precious metals return to the chore of base building. Also note that although silver made a new low price in its now 3½-year correction, gold is still holding well above the $1,180 low it made in June 2013. This divergence is a sign that the precious metals are oversold and due for a bounce.”