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Latest Public Research ARTICLES & AUDIO PRESENTATIONS |
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Last update:
05/20/2012 8:35 AM |
Postings begin at 5:30am EST
and updated throughout the day |
External Articles: |
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"BEST OF THE WEEK " |
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Source |
TIPPING POINT or 2012 THESIS THEME |
HOTTEST TIPPING POINTS |
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Theme Groupings |
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MOST CRITICAL TIPPING POINT ARTICLES THIS WEEK - May 13h -May 19th, 2012 |
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SOVEREIGN DEBT CRISIS [Euope Crisis Tracker] |
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BANK RUNS - It Just Keeps Accelerating
Greece's Big Run 05/17/12 BI
The story of the moment: deposit flight! That's the nice way of saying: A run on the banks. Sky News' Ed Conway has put together this chart on the relative level of deposits in various countries' banking systems since the beginning of 2011. Greece has just been taken to the woodshed over the last year or so. Note that this doesn't include the latest data, which would probably show an increasing in outflows over the last month and a half, as fears of a Grexit get even more real.
Capital Flight From Greece Accelerates, €5bn in May, Exodus Even Hits Time Deposits 05/17/12 Mish
- Capital flight from Greece continues, €5bn in May, not counting orders to buy foreign bonds,
- Athens-based bankers said withdrawals exceeded €1.2bn on Monday and Tuesday – 0.75 per cent of deposits ,
- Withdrawals last week reached €700m, excluding funds used to buy German bonds and other foreign securities,
- Since the end of April, deposits had been reduced by some €5bn, including orders to buy foreign bonds and securities
PICTURE AT THE END OF THE YEAR
Public flees with their deposits to German Banks

PIIGS and GERMANY Flee to ECB
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05/17/12 |
Mish |
2
2- Sovereign Debt Crisis |
EU ELECTIONS - A Wave of Change Coming
Europe Country-by-Country Election Dates, Politics, Unemployment, and GDP 05/15/12 BI
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05/16/12 |
BI |
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2- Sovereign Debt Crisis |
GERMANY - Assesses Greek Exit Impact to Germany
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ECONOMIST 2 YEARS AGO |
WEEKEND DER SPIEGEL |
GERMANY HAS THROWN IN THE TOWEL ON GREECE & AUSTERITY
GERMANY WAVES THE WHITE FLAG ON INFLATION
GERMANY SEES THE COSTS
Germany Begins Quantifying The Cost Of A Greek Exit (And Discovers Contingent Liabilities Are All Too Real) 05/12/12 Zero Hedge

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05/14/12 |
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2- Sovereign Debt Crisis |
EUROSIS - Costs of Greek Exit
JPMorgan Estimates Immediate Losses From Greek Exit Could Reach 400 Billion 05/14/12 Zero Hedge
It is possible that necessary fiscal transfers are not politically feasible or that Germany is eventually far too different from the rest to coexist in a monetary union. In this case the horrific scenario of a break up becomes more likely. We would like to make two observations: 1) it is less painful and makes more economic sense for Germany rather than periphery to leave. See above discussion on consequences of a Greek exit for Greece, 2) the cost of a breakup is rising exponentially over time. Bundesbank TARGET2 balance reached a new high of €644bn in April.


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2- Sovereign Debt Crisis |
RISK REVERSAL |
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STA RISK - Too Early for Fed "LIquidity" Move
Risk Ratio Indicating More Correction Coming 05/18/12 Lance Roberts
In order to measure the "greed" and "fear" syndrome I have taken the most common measures of investor sentiment including the volatility index, new highs versus new lows, two different polls on bullish versus bearish sentiment and the rate of change of the S&P 500 index and using weekly data combined them into a single "risk ratio."
- the sentiment ratio generally starts turning down before the market actually peaks.


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05/19/12 |
Lance Roberts |
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3 - Risk Reversal |
CREDIT MARKETS RE-ALLIGN - RISK-OFF or CURRENCY FLIGHT?
Flight From Risk 05/17/12 Zero Hedge
RISK:
- VIX soared over 24% to close at its highest in 5 months.
CREDIT:
- Credit markets, which led the selloff, continue to slide but this time with equities in sync.
- IG and HY credit are now negative YTD in the US and the nominal price of US equities remains comfortably positive for now. We hope this chart gives a sense for how the credit market (which does NOT trade on a USD numeraire - but on a relative-value risk premium - bps) can provide useful information when equity prices (which ARE priced in USD fiat units of account) get carried away on a wind of reflation.
- It would seem credit remained a lot less sanguine from the get-go...
- Credit and equity markets are also now in sync and plunging (but we note we did not see the overhang hitting corporate bonds today - making HYG even more cheap) with HY spreads back over 700bps for the first time this year!
YIELDS:
- 30Y yields fell the most in 5 months today 5 month lows. DOWN -21bps
- 10Y yields crashed to all-time closing lows - DOWN -14bps to 1 1.69% handle.
- 30Y Treasuries plunged but 10Y fell to record closing low yields!!!

- Treasuries and Stocks now back in sync and leaking quickly...
- As Treasury yields just plunged today - and the very short-end has pushed up in yield by over 3.5bps this week...Are foreign bank US offices selling down their carry-guarenteed short-term bills to repatriate cash?

THE GAME IS CALLED "FINANCIAL REPRESSION"
- This chart illustrates the 112-year trend of the 10-year Treasury bond yield (thick blue line).
- Escalating concerns over Europe in addition to a struggling global economy have encouraged investors, institutions and governments alike to move a portion of their investment dollars to the relative safety of the US.
- This has resulted in a significant decline of the 10-year Treasury bond yield. In fact, the 10-year yield has declined a fairly dramatic 340 basis points (i.e. 3.4%) since the peak of the credit bubble.
- This decline has brought the 10-year Treasury bond yield to a 112-year low.
- The decline of the 10-year Treasury bond yield has been significant enough to bring the 10-year yield near resistance of what is a 26-year downtrend channel.
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3 - Risk Reversal |
CHINA BUBBLE |
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CHINA - Joins 'Reflation Race'
In Much-Anticipated Move, China Cuts Reserve Requirement Ratio, Joins Reflation Race 05/12/12 Zero Hedge

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05/14/12 |
Zero Hedge |
4
4 - China Hard Landing |
JAPAN - DEBT DEFLATION |
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JAPAN - Simply A Ticking Time Bomb (Right Behind Europe, But Worse!)
Japan's WTF Chart 05/15/12 Zero Hedge
TOTAL SOVEREIGN DEBT TO GOVERNMENT REVENUE

BACKGROUNDER TO THIS CHART
GOVERNMENT DEBT TO GDP
RELATIVE GOVERNMENT DEBT VERSUS GDP
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05/16/12 |
Zero Hedge |
5
5 - Japan Debt Deflation Spiral |
BOND BUBBLE |
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BOND MARKET - 10 year Yield Hits New Lows - Flight to Safety, New Highs.
Treasury yields drop back to 7 month lows and a spectacularly awful 1.77 handle

The USD rose further and EURUSD dropped back below 1.29 for the first time in 4 months but perhaps AUD losing pairty with the USD was the bigger news - back to 5 month lows. |
05/15/12 |
Zero Hedge |
8
8- Bond Bubble |
CHRONIC UNEMPLOYMENT - Here's What It Takes to Be Employed
Facts About How Americans Are Ridiculously Overworked 05/16/12 BI
American worker productivity has increased 60 percent in the past 20 years. Wages have stagnated. That means workers are doing much more for less. All the extra hours and responsibilities are leading to health consequences: both physical and psychological. Chronic illnesses and obesity are on the rise.
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39 percent of people work more than a typical workweek (40 hours)
Source: American Psychological Association
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The average American gets 90 minutes less sleep than they should, and the number of sleep disorders has skyrocketed in recent years
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Americans are literally working themselves to death — as job stress contributes to heart disease, hypertension, gastric problems, depression, exhaustion, and a variety of other ailments
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If current trends continue, Americans will be spending as much time at their jobs in 2100 as they did back in 1920, when regulations were put into place to protect workers
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69 percent of employees report that work is a significant source of stress and 41 percent say they typically feel tense or stressed out during the workday
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An astonishing 39 percent of employees feel rage at their coworkers — and 34 percent resent their coworkers for working less than they do
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52 percent of U.S. workers report that they have changed jobs in hopes of finding a less stressful one
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83 percent of employees report going to work sick because they're afraid they'll be punished for missing
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36 percent of Americans don't plan to use all of their vacation days
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The U.S. is one of few countries that doesn't legally require workers to take time off. By contrast, countries like France and England require workers to take 30 days of vacation
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Half of employees are less productive at work as a result of stress, meaning that they crash and lose work hours or have difficulty concentrating
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And the hours are making people fat: 44 percent of workers have gained weight from their jobs
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Since the recession, 86 percent of executives say their company now expects more of their employees, and 59 percent of employees feel more pressure
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24 percent of employees work six or more extra hours per week without pay. That figure doubles for management
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10 - Chronic Unemployment |
CHRONIC UNEMPLOYMENT - False Realities
The Hidden American Economic Depression 05/14/12 Lance Roberts

- There is a hidden economic depression running along the underbelly of the country. High levels of unemployment have kept pressures on wages even as work hours have lengthened.
- The burgeoning labor pool and demand for work is suppressing wages as companies opt for increasing productivity and streamlining employment to protect corporate profit margins.
- The cost of living is affected by the rising food, energy and healthcare prices without a compensatory increase in incomes - more families are forced to turn to assistance in order to survive.
- For a large portion of America the issue of unemployment and underemployment remains an everyday concern. Without government largesse many individuals would literally be living on the street.

- Social security, Medicaid, Veterans' benefits and other social benefits have continued to rise. The government "safety net" is already under tremendous strain as the number of "workers" supporting the system has fallen markedly over the last 30 years. With more than 78 million "baby boomers" rolling into retirement the Social Security Administration has already warned they will begin paying out more than they take in by 2017 and will be insolvent not long thereafter without real reforms to the system.
- For the average person these social benefits, however, are critical to their survival as they make up more than 22.5% of real disposable personal incomes.
- With 1/5 of incomes dependent on government transfers it is not surprising that the economy continues to struggle as recycled tax dollars used for consumption purposes have virtually no impact on the overall economy
- Astoundingly the total benefits in 2011 rose above $71 Billion which was a 107% increase from 2008. Yet we are told the economy is improving?
- this huge increase in demand on "welfare" support in its various forms does not include the more than 46 million Americans which are dependent on the Supplemental Nutrition Assistance Program (SNAP), or more affectionately known as "food stamps."

- As the ability to source income from traditional support programs becomes limited or exhausted - individuals can become very creative. Two of the most interesting areas that have been tapped to support basic consumption needs since the beginning of the "great recession" is student loans and disability insurance
DISABIITY GAME
- What is most notable, however, is when the surge of individuals claiming disability began - exactly two years from the beginning of the financial crisis. This is when the 2 years of extended unemployment insurance began to run out. Well, it is either that, or the work place has become extremely hazardous over the last couple of years. Today, more than 28 million Americans who are of working age have a disability - a level higher than at any other time in recorded history.
GOING BACK TO "SCHOOL"
- However, if you cannot claim disability why not just say you are going back to school.
- We are told that we should pity the youth of America who are graduating college but so indebted that they can not service their debt or have a fair start at life.
- However, forgiving student loan debt when it wasn't used for education, but a new iPad instead, is another issue.
- The chart shows only the federal student loan program which has surged 400% since the end of the last recession and is now the federal governments largest financial asset comprising 31% of its balance sheet.
- However, in reality, student loan debt in total, which including private label loan programs, has now reached $1 trillion.
- Either I am correct about the real uses of student loan debt, or, we are about to embark upon the great educational renaissance

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05/15/12 |
Lance Roberts |
10
10 - Chronic Unemployment |
US HOUSING - No Sign of Foreclosure Decline
Foreclosures Show No Sign of Decline 05/16/12 WSJ
- At the end of March, 11.8% of all loans were at least 30 days past due or in foreclosure,
- This is down only slightly rom 12.8% a year ago and 14.7% two years ago,
- 4.4% of mortgages were in some stage of foreclosure at the end of March unchanged from the previous quarter and down only slightly from 4.5% a year ago,
- The percentage of borrowers behind on their mortgage but not in foreclosure fell modestly to 7.4% at the end of March from 8.3% a year earlier,
- Construction starts on new housing increased 2.6% in April to an annual rate of 717,000,
- New permits to build homes fell 7% from a 3½-year high in March,
The national foreclosure rate remains elevated largely because of states that require banks to process foreclosures through the courts. |
05/17/12 |
WSJ |
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15 - Residential Real Estate - Phase II |
TO TOP |
MACRO News Items of Importance - This Week |
GLOBAL MACRO REPORTS & ANALYSIS |
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US ECONOMIC REPORTS & ANALYSIS |
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US GROWTH ROLLING OVER - The Early Indicators--Empire & Philly Fed, Rail Traffic
Philly Fed: Regional manufacturing activity contracted in May Survey 05/17/12 Calculated Risk
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05/19/12 |
Calculated Risk |
US ECONOMY |
FALSE GDP - Proof of "Channel Stuffing"
"Channel Stuffing" Bubble Pops, "Debilitating Price Cuts" Arrive 05/18/12 Zero Hedge
“It’s like a contagious disease that will spread." Wait, so Channel Stuffing is... bad? And if 45 days of inventory "foreshadows debilitating price cuts", then what should GM with its 86 days of full vehicle days supply in the US say?
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US ECONOMY |
LEADING US ECONOMIC INDICATORS - Turns Negative
Leading Economic Indicators Turn Negative 05/17/12 EconomPicData
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US ECONOMY |
US TRADE BALANCE - Industrial Supplies Go Negative
Trade Deficit Blow Out 05/10/12 EconompicData
The trade deficit widened more than forecast in March as American demand for crude oil, computers, automobiles and televisions propelled imports to a record. The gap grew 14 percent to $51.8 billion, the Commerce Department reported in Washington today. The median estimate of economists surveyed by Bloomberg News called for an increase to $50 billion. A 5.2 percent jump in imports, the biggest in more than a year, swamped the 2.9 percent gain in exports, which also reached a record. Change in Trade Balance - Chain-Weighted 2005 $$ (i.e. real change in 2005 dollar valuation)
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US ECONOMY |
US FISCAL CLIFF - The Fed's Game Plan
THE SET UP - FOMC STATEMENT:
Fed Minutes: "Easing May Be Needed If Recovery Falters" 05/16/12 Zero Hedge
Key highlights:
- SEVERAL ON FOMC SAID EASING MAY BE NEEDED IF RECOVERY FALTERS
- MOST' FOMC PARTICIPANTS SAW GRADUAL DECLINE IN JOBLESS RATE
- MOST FOMC PARTICIPANTS SAW INFLATION SUBSEQUENTLY AT-BELOW 2%
- MOST FOMC MEMBERS SAW UNEMPLOYMENT ABOVE TARGET IN LATE 2014
- SOME PARTICIPANTS SAW RISKS INFLATION PRESSURES COULD BUIL
WHAT'S COMING:
This Is What Will Happen If The Economy Flies Of The Fiscal Cliff 05/16/12 Goldman
How big of a hit would the economy take if we flew off the fiscal cliff? A new note from Goldman's Alec Phillips walks through various scenarios ranging from everything extended (all stimuli and tax cuts) to everything expires (all the spending cuts and tax hikes kick in). The worst case scenario: If everything expires, and we runs straight off the fiscal cliff, a hit of about 4% to GDP.
The US Economy In One Simple 'Swirlogram' 05/16/12 Goldman via BI
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05/17/12 |
Goldman |
US ECONOMIC |
CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES |
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Market Analytics |
TECHNICALS & MARKET ANALYTICS |
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EQUITY SELL-OFF- Is S&P 500 at 1300 = Support?
Flight From Risk: Gold Surges 05/17/12 Zero Hedge
ECONOMIC NEWS DRIVERS
- Philly Fed's confirmation of deceleration in US macro data
- Europe's increasingly crescendo-like implosion
EQUITIES:
- Lows of the day at 1300.50 (at 3.5 month lows)
- Early rally late fade pattern of the last 8 days
- Now More aggressive as ES pushed towards 1300.
- CAT was a dog today accounting for 25% of the Dow's losses,
- AAPL tumbled further - heading towards a 20% retracement off its highs.
- Financials tumbled further with Citi inching very close to red YTD (and JPM falling rapidly).
FINANCIALS
- Financials are rapidly losing ground with Citi and JPM about to go red YTD...
GOLD:
- Gold surged by its most in 4 months (and 2nd most in 7 months),
- Gold is unch on the week
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05/18/12 |
Zero Hedge |
ANALYTICS |
CORPORATE CASH & EQUIVALENTS/TANGIBLE ASSETS - Why So High?
Why Corporate Balance Sheets Just Don't Matter In The New ZIRP Normal 05/11/12 Zero Hedge
- Under ZIRP, when every basis point of debt return over 0% is praised, and an epic scramble ensues among hedge for any yielding paper no matter how worthless, the balance sheets of companies just do not matter. In other words, for companies that have massive leverage, high interest rates, negative cash flow, which all were corporate death knells as recently as 2008, the capitalization structure is completely irrelevant.
- the Fed, due to its policy of destroying the cost of capital as an indicator of corporate health, has forced lenders to agree to less protections in exchange for preserving a comparable cash interest stream
- It allowed corporations to minimize secured creditors as a class and therefore the corporation will no longer have to preserve EBITDA and Free Cash Flow over a certain level, nor will it have to engage in prudent hedging.
- EXAMPLE: Chesapeake just announced, following today's epic drubbing, that it is refinancing its secured debt facility (with its numerous restrictive covenants) with $3 billion in brand new Libor+7.00% unsecured paper (courtesy of Goldman and Jefferies). In doing so, CHK just got at least a one year reprieve.
It's An Interconnected World After All 05/14/12 Zero Hedge

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05/15/12 |
Zero Hedge |
ANALYTICS
Fundamentals
Earnings |
COMMODITY CORNER |
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THESIS Themes |
FINANCIAL REPRESSION |
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A Great Example Of The Coming Financial Repression 05/15/12 BI
Investors who bought conventional Gilts in 1973 had to wait for 12 years to earn a positive real return on their investment. And this is exactly the sort of financial repression we have to look forward to under the current system controlled by the political and central banking elite.
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05/16/12 |
Sovereign Man |
FINANCIAL REPRESSION |
FINANCIAL REPRESSION - Can You Believe this Headline?
House Votes to Cut Food Stamps to Avoid Defense Reduction 05/12/12 BL
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FINANCIAL REPRESSION |
FINANCIAL REPRESSION - MacroPrudential Polices for Germany
Moody's Germany's Macroprudential Steps To Be Credit Positive for Bank Bondholders, Sovereign 05/13/12 wsj
The ratings firm said that although details still need to be finalized, macroprudential instruments may include:
- Anti-cyclical capital buffers,
- Systemic-risk buffers, and
- Increased risk weights for asset classes
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FINANCIAL REPRESSION |
CORPORATOCRACY -CRONY CAPITALSIM |
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GLOBAL FINANCIAL IMBALANCE |
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SOCIAL UNREST |
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STATISM |
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CURRENCY WARS |
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STANDARD OF LIVING |
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DISPOSABLE INCOME - Negative Even With Bogus Inflation Numbers
Personal Income and Outlays 04/30/12 EconomPicData
Over the longer term and on a real per capita basis, March marked the third month in a row in which disposable personal income printed a negative year over year figure, which shows just how how weak the employment recovery has been.
REAL CONSUMPTION WEAKENESS
Demand does tend to decrease when the price of good or service quadruples like energy has in recent years.
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05/18/12 |
Econom
PicData |
STANDARD OF LIVING |
GENERAL INTEREST |
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TO TOP |
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