As all hallows eve approaches, we are glad to inform you that we will be in attendance at the AFP annual conference in Washington, DC along with Dr. Ben Bernanke, Thomas Friedman, and 6,500 other Financial ghouls and goblins over the early part of next week. If any of our readers will be there, feel free to drop us a line, we would love to connect with you, it will be a welcome respite from the deluge of mainstream economic/finance/banking information that has already started to bombard us in the mail!
We leave you today with what may just be the world’s first “Bit o Latern”:
The World’s First Bit o Lantern?
We wish you all a safe and fun Halloween here at The Mint!
For those who do not follow Bolivian Politics, Evo Morales has one a third term as President of the South American nation we are happy to call our second home.
As Morales is seen as a Socialist hero, his reelection coincided with a deluge of praise for his hand in the Bolivian Economic miracle that has unfolded over the past 10 years from the left. It seemed to start with an article from the New York Times back in February, which highlights Morales’ success and the paradox that it presents. On one hand, he is a, well, a proclaimed Socialist. On the other, he runs a balanced budget and has largely rejected the advice of the IMF and other financial overlords of the world:
It is true that the Bolivian economy has grown at a mighty pace over the past 10 years, however, to simplify this miracle to solitary policy changes such as the legalization of coca farming, a deeply personal matter for Morales, or other various social policies noted by the authors is to miss the point completely.
As a public service, we present to you today the short list of reasons why Bolivia is experiencing an economic miracle in the eyes of many Westerners:
Benford’s Law, which would account for Bolivia’s rapid relative growth. As a country, it was near the bottom of many world measures in terms of economic statistics. As such, things tend to go up from a low level quickly on a relative basis.
Currency policy: The Boliviano trades tightly with the USD similar to the Yuan. This is due to the fact that much of the country’s savings are held in dollars. Currency stability = real growth
Legalize it: While the legalization of coca is controversial, the removal of regulations has opened up a wild west of trade and attendant economic activity.
Anarchy reigns: Ever since Simon Bolivar freed it from Spanish rule in 1825, Bolivia has had 81 Presidents and been ruled by various “Juntas” or forms of military rule 9 times. By contrast, the US has been around for 50 years longer and had just 44 Presidents. If our theory that Anarchy produces stability holds, it would follow that the Bolivian economy is one of the most resilient on the planet, one that cannot help but grow from a solid base.
Evo’s Charisma: While Evo Morales is often chided, he is simple and lovable at heart, an anomaly in the cesspool of modern politics. He has drawn a great deal of positive attention to Bolivia as the first indigenous President in the nation’s history. This has given Bolivia international exposure not before seen.
The Open Letter: While it is a longshot, perhaps Evo has read our open letter to him and is secretly implementing our policy proposals.
While Bolivia was extremely poor in the eyes of the world, yet rich in so many ways.
We love Bolivia, it is one of the most precious, pristine, and complicated places on the planet and we are honored to call it our second home. While speculation as to what has caused the current economic miracle there will continue, we know one thing to be true:
Are you teachable and willing to learn new things? Are you interested in making better financial decisions? Are you interested in making more money? Then you may just be ready for Business Street Smarts. What is Business Street Smarts? According to the marketing copy, it is a program which will allow us to 1) Know our Finances, 2) be Efficient, 3) Control our taxes, and 4) Prevent Fraud. What business owner wouldn’t be interested in these skills?
Best of all, it is a fireside chat with a former colleague or ours, none other than Mike Field, CPA, JD. For those who don’t do acronyms, he is an accountant and a lawyer. Despite these handicaps, Mike is a fun guy, and rivals Tom Cruise in the category of person producing the most dental glare when they smile. Here he is laying out the virtues of Business Street Smarts:
We have just completed the first audio portion of the downloadable MP3 series, which is a lesson in establishing “hooks” for memory retrieval. In this section, Field shows you how to organize Information in your mind so that you can instantly retrieve it. He employs a unique teaching technique to achieve this goal. The technique seems basic, and it is. The jest of it is to use the familiar and join it, mentally, with the unfamiliar.
At the end of the first day, we are aware that we will do the following over the course of the next 15 days in terms of sections:
1) Build a Foundation of Primary Financial Statements, Balance Sheets, Income Statements
2) Learn how to analyze these statements
3) Understand Business Taxes and the interplay with one’s personal taxes
4) Learn how to detect and prevent Fraud, as well as some basics in bookkeeping
However, all we know at this point is our way around an unfamiliar house with some incredibly strange things involving Olympic gymnasts, Count Dracula, and a cat happening in the front yard, on the porch, and in the living room. Yet somehow, it all makes sense. Will it translate into better financial and business decisions for The Mint? Stay tuned.
Approximately one year ago, we had the good fortune of being laid off from our most recent employer of seven years. We say good fortune as the first time this happened to us, after seven years at our first employer (on September 10, 2001, which is a story for another day) it marked the beginning of what continues to be the greatest adventure of our lives.
Staying in one place is comfortable, one knows what to expect, what to do, more or less what the rules are. It is easy to see why many people get a job and then go on autopilot for 30 years. However, staying in one place is also dangerous in that one runs the risk of stagnating to the point that they unwittingly join the ranks of the walking dead.
If you have just been laid off, you are likely uncomfortable, which is good, because there is hope for you. There will be time for that hope to blossom and trust us, it will. However, if you have just been laid off from a long time employer, chances are that what you feel at the moment is intense discomfort laced with panic. This is normal, and should drive you to take decisive action.
What should that action be? As a public service here at The Mint, we are offering a series of steps that were applicable to our situation in Portland, Oregon, circa 2014. They may or may not be useful and/or accessible to you depending upon your situation, and are not to be taken as any manner of legal/financial/tax or any other sort of advice.
With that disclaimer out of the way, we hope to guide others and save them some time and confusion in navigating the system of public support available in the Willamette Valley.
One last caveat, the following list is comprised primarily of public resources. At this moment in time, faced with losing a primary source of income, it is unlikely that one’s political ideology will stand in the way of taking advantage of the resources available to them. If you find yourself struggling at all with this, be reminded that these public resources are absolutely necessary given the broken monetary system that we live in. Indeed, the use of debt as money and the economic distortions it causes every day is likely the indirect cause of your present circumstance. Acknowledging this fact should put to rest any hesitations about whether or not to apply for public assistance, not matter what your present circumstance.
Unemployment Insurance: The first thing we recommend, unless you have a job that you will start within the next 5 days, is to file an unemployment claim against Oregon here: https://ssl8.emp.state.or.us/ocs4/index.cfm?u=F20141022A163756B40164586.0519&lang=E if you were working in Oregon and laid off (not fired with cause), you should have no problem qualifying. The reason not to delay this step is that you have the right to claim the first day you are out of work and have to wait a week before you can claim a week of benefits. They last for six months and are usually ~$500 per week on the high end as of this writing. Even if you were fired for cause, you may still qualify for unemployment insurance. Oregon is generous in this sense and many employers are paying for it in the form of an employment tax anyway and will encourage you to take it.
Do not delay on this step! Call the same day you are dismissed, otherwise you are literally leaving money on the table.
The next two steps may or may not apply to one’s specific circumstance as they are income qualified programs which take into consideration other income sources that a household may have. If you and your household have no other income source, bear in mind that you are below many of the income thresholds as of the day you were laid off and are likely to qualify based on the current circumstance. This is important, because certain programs, such as SNAP, last for six months before you have to recertify income. At that point, you will be employed (we here at The Mint believe in you!), but in the meantime, you get a six month stipend
2. SNAP (Food Stamps): They usually will give these within a week as they are considered essential. It is scaled on income and you qualify the minute your income drops below a certain level based on the number of people in your household. Below is the website to apply through if applicable: http://www.oregon.gov/dhs/assistance/pages/foodstamps/foodstamps.aspx
In some cases, enrolling in SNAP will automatically qualify you for coverage, which is nice, because by this time, you may be getting sick of pulling together all of your personal data and submitting it to a government agency that will no doubt be hacked.This step is important as, once qualified, you will not have to pay COBRA or a private health insurance. The coverage may not be great, and, depending upon how much you use your health insurance, it may be best to stick with the current provider, but if all you need is peace of mind on this front, it will save a chunk of change.
4. Housing Assistance: Depending upon your housing situation, there may be rent or mortgage assistance which you now, overnight, have become eligible for. They can be a pain to apply and take a while to kick in (if they do at all), but may be worth it if they do. Here is a list of resources in Oregon: http://www.oregon.gov/dhs/assistance/Pages/housing.aspx
The above four steps are “defensive,” now for the job search, or “offensive” side, assuming you will be looking for a job, at least for the short term until your next movie deal comes through.
Networking: There are a number of networking opportunities that any job seeker or small business owner would be wise to attend from time to time. Attending these events will not only give you something to do other than surf the internet for jobs, it will inevitably encourage you to see you are not alone. You may even be inspired. One of the best in Portland is Portland Connect, you can request an invite here: https://www.linkedin.com/groups/Portland-Connect-36370/about They host a number of popular events and is a nice and efficient way to get to know some people who are there to mutually help each other. The group drives home an oddity that we have found to be true in Portland, that it is a town where you must network face-to-face. Portland Connect is a great place to do just that.
Recruiters: If your profession is in such demand that it can support a recruiting industry, reach out to them, as they are literally in the business of finding you a job. In Finance and Accounting, which happens to be our industry, we recommend Robert Half. There are many others as that are industry specific. Find them, call them, they will help.
As for internet job searching: For the most part, applying online, while giving a strange sense of accomplishment, is akin to sending a message in a bottle. Chances are it will never get read and, if it does, the chances of it reaching the intended recipient at the right time may be slim. It is always best to call someone at the company if possible to at least know you are not sending an “SOS to the world.” Nevertheless, there are some sites which tend to be more responsive than others. We seemed to have the most luck in terms of response from Craigslist posting, and Mac’s List: http://www.macslist.org/ which is specifically targeted towards non-profits, our present area of expertise. Idealist: http://www.idealist.org/ also has good leads in terms of non-profits. Generally speaking, we had little luck with large companies and wasted a lot of time on their sites applying, though it can be good practice.
Friends and Family: Now is the time to reach out rather than retract. Theoretically, your friends and family are another set of eyes and ears on the ground and generally be willing to assist you in your plight if it is within their means. Reach out to the great brother and sisterhood of mankind, for we were made to help each other. Indeed, disinterested service to others is the sure path to happiness. Just remember to lend a hand when you are on the other side as well!
There are innumerable resources out there which may or may not apply to your situation. We provide those listed above as a public service, for they were pearls of wisdom that we had to grasp for mostly in the dark, if it sheds the light on someone else’s way as they walk the path of unemployment, the time spent compiling it has been well worth it.
Above all, stay encouraged! The US economy is going gangbusters and you have a place in it, it may require relocating, training, and generally becoming uncomfortable.
Get used to it, for you are now being asked to play a larger part of the long story of human progress. Embrace it.
Yesterday we had the pleasure of hearing a presentation by John Shin, the G10 FX Strategist at Bank of America. Mr. Shin is highly intelligent and a deft presenter, as one would expect from someone of his caliber (Harvard PhD in Econ, etc.) He also managed to make the material, essentially a rehash of Central Bank rate policy over the past several years through today, somewhat entertaining and relevant.
One of the big takeaways from the presentation was that the ECB has not been performing well in its role when compared to the FED, Bank of England, and Bank of Japan, against which it is often compared. Mr. Shin acknowledged that in many cases their hands are tied as, while they have the experience, they seem to struggle with their mandate, to maintain a stable currency, as they are vilified in a world where other Central Banks have taken stimulus to extremes once thought unimaginable.
The Euro is a very important currency. The Euro and the ECB as its managing institution are also very young relative to their counterparts. Making their job even more difficult is the fact that they are managing the currency for the Eurozone, whose internal fiscal and market dynamics at time defy analysis if not logic. Here at The Mint, we recognize that the ECB is simply making the best of what’s around as they constantly mend the currency union that holds what is at times a tense economic union together.
Mr. Shin also spoke at length about the Unemployment rate in the US and the associated workforce participation rate (roughly 64%) which has rapidly declined due to, according to Shin, a roughly 50/50 mix of demographic and economic factors. He also put the workforce participation rate in perspective, as it is still above where it was in the 1960’s, roughly 59.5%.
Generally, he was bullish on the US Economy and the US Dollar, and had pegged his expectations for FED rate increases to mid-next year. It will be interesting to see if his call plays out.
After the presentation was finished, we asked him for a nugget of advice in terms of what his one Key Indicator was to keep a pulse on economic activity. He said that, while they track many indicators, as one would expect, there is none that speaks more to the contemporaneous state of the US economy than the monthly jobs numbers. Concretely, when they top 200,000, the economy is in good shape, anything below that is a bad thing in his view. He said no other data point correlates so well with other economic growth indicators.
So there you have it, the dollar will remain strong and as long as the economy adds 200,000 jobs or more per month, all is well from the perspective of one of B of A’s best and brightest.
Mr. Shin is in charge of the “World at a Glance,” which is their flagship publication which highlights the bank’s key forecasts in FX, rates, and commodities. An extremely interesting read put together by some of the best in the business.
Will his forecasts on FED rate increases come to pass in mid-2015? If today’s market action is any indication, low rates could be with us for a long time to come.
For some time we have followed a group known as Positive Money UK on Twitter. They seem to be among the few people/groups that have a decent comprehension of the flaws in what we call the insane debt based monetary system in which the inhabitants of the earth are either coerced or compelled to live by. They describe themselves as “a movement to democratise money and banking so it works for society and not against it.”
We were reminded of this by one of their tweets today:
The alien meme sums up what we have been driving at for some time now here at The Mint. We tend to focus on the acceleration of the damage that humankind causes to nature as the nasty side effect of using debt as money, but it is well noted in other corners that indeed, many of the distortions in relationships between persons and nations have the concept of extinguishing debt as their root.
The video which is linked to in the above Tweet from Positive Money UK is presented as a public service below, it does a nice job of showing how the only way to create money in our insane, debt based monetary system, is to go deeper into debt or have someone else go into debt.
While the video is spot on in terms of money creation, they present only half of the solution (which we find is common in many monetary reform circles, namely Bitcoin). The second half that is too often ignored is that 1) money, as a concept, necessarily will take on many forms in the world and 2) whatever is used as money by a majority will necessarily require an associated debt market to successfully operate for any length of time (the lack of a viable debt market is killing Bitcoin). This is the great supposed advantage of using debt in the form of Central Bank notes as money, infinite debt markets = infinite liquidity, meaning there is always money available. It is this advantage that any viable monetary reform must include, or else it is doomed from the start.
On their website, Positive Money UK points out that “Only 1 in 10 MPs understand that 97% of money is created by banks.” As the English are generally cleverer than Americans, we would imagine the ratio in the governing bodies on the US side of the pond to be even lower. If you need proof of this, just watch the next Senate Banking Committee session on C-Span.
Nobody seems to get that today, circa 2014, money and debt are the SAME THING. What passes as money today are nothing more than liabilities of Central Banks. This is a worldwide phenomenon, and the effects are profound.
Money is a concept that attaches itself to certain real world things in various forms. Credit is another concept which attaches itself to various agreements. They are the antithesis of each other. Most people generally understand this and spend a good deal of their time working or causing others to work in order to attain a reasonable balance between the two on their ledgers, regardless of the size.
However, as the above video partially illustrates, most people are wrong, the only way to “make money” is to “make debt.” This is causing SEVERE imbalances in the natural world as the activities of mankind continue with an unconscious disregard for the effects of the real world.
The effects on the real world are this: There is an inordinate amount of fallow land left unattended while an increasing share of mankind passes time in urban settings, with their own productive capacity squarely aligned, day in, day out, in conflict with the needs of the natural world.
The irony is that many have taken note of the dire state of affairs of nature (read Climate Change, etc.) and then misdiagnose the cause. They clamor for more “money” to solve problems that have come about as an indirect result of the creation of more “money.”
Humankind was never meant to live under that shadow of such an overabundance of credit. The removal of limits on credit creation has effectively removed the natural governor of the activities of man, the need to create real, free market money, making certain that debts are settled in terms of real goods which are demanded by a free market economy. The return to this natural governor on human activity is indispensable if humankind is to even begin to address climate change and world peace.
The return to this natural governor will be painful, but it is inevitable, and the more one can prepare now to operate in a world where money and credit operate in their appropriate the capacities and take their appropriate places in a balanced economy, the better.
The world is headed, kicking and screaming, towards a forced monetary reset, and things will be much different than they are now.
We applaud the efforts of Positive Money UK, for they are on the right track. You too can follow them on Twitter or YouTube and learn more about this fascinating and important subject that, by our own reckoning, only one in a million comprehend. Will that one be you?
Today the BLS reported that payrolls grew in September and that the stated unemployment rate dropped to 5.9%. They also published the labor force participation at 62.7%. The handy chart below from the folks at Business Insider shows how steeply labor force participation has dropped over the past five years.
Labor Market Participation aside, the 5.9% unemployment is exciting for banks. On one hand, it can be seen as a sign that more people are working and theoretically becoming creditworthy. This is big because consumers with deposits are cherished in the Basel III framework that they are painfully working their investment ladders into.
On the other hand, it is seen as just high enough that the Federal Reserve will not raise short term interest rates for fear of “derailing the recovery” or whatever phrase Janet Yellen chooses to employ in her latest effort to mask the brutal fact that they are continuing to provide money free of charge to a painfully inept banking cartel.
While much will be written about today’s “Goldilocks” job report, it matters not in terms of Fed policy. The Fed will continue to offer money free to banks until they are certain that Basel policy reforms will not inadvertantly cause (rather than prevent, as they are designed to do) the financial crisis. Meanwhile, in the real world, the cost of labor, meaning the cost of hiring someone who can actually perform a specific task, is about to skyrocket.
The reason for this is that there remain severe imbalances in the labor market caused by recent advances in technology, namely cloud based administrative services and logistics, which are now colliding with a relative decline in the recent productivity gain that said technology was providing. While large productivity gains having been the norm, there is soon to be a lack of persons who have the requisite skills to run such systems efficiently, which means that those productivity gains will at a minimum not continue and may even be lost.
There is also another labor undercurrent that the BLS data does not capture. This is the large scale disruption of entire industries that the cloud and logistics revolution is enabling.
Indeed, there is much more to the labor market than a tidy percentage point can express, as nearly five years of ZIRP is pushing the division of labor to new extremes. Employers, Employees, and the BLS may soon become archaic terms, as American Society moves towards outsourcing on steroids.
Today’s 5.9% is little more than bad information, unless of course, you are a banker, in which case it means that the Goldilocks days are here again, and the Fed’s subsidy, a license to strip mine the earth that is provided on the backs of its inhabitants and nature herself, will continue until further notice.