The Cardinal Crisis
Is American Middle Class Being Wiped Out?
&
You Know When You Are In A Depression When...
Also,
The Math Formula That Killed Wall Street?
Plus,
China Braces For End of Cheap Manufacturing
And,
Future Shock:
Are Times Changing Too Fast?
By Theodore White; mundane Astrolog.S
Θεόδωρος
I continue to forecast on the economy, Wall Street, and the impacts on society here on Global Astrology for a reason. It has been, and remains my contention that we are now living in historic astrological times.
The transition between the closing of one era, that of the late 20th century, and the emergence of the new era of the decade of the 2010s.
For instance, on July 26, we have begun the fifth, and last Saturn-Uranus opposition of our current time cycle.
This last exact opposition, along the Aries/Libra axis, is now in effect as the Cardinal T-Square involving Jupiter, Saturn, Uranus, and Pluto strengthen during the summer of 2010 in the northern hemisphere.
In this edition of Global Astrology we look at the American Middle Class, which according to some, is being wiped out by the corrupt and uber wealthy.
We also take a look at the mathematical formula that helped lead to the global Bank Crisis in The Math Formula That Killed Wall Street?
A writer asks, You Know You Are In A Depression When...?
Also, we look to the past to understand the present with a retro-future look forward in Future Shock: Are Times Changing Too Fast?
We continue to see the power of this waning cycle of the original 1982 Saturn/Pluto square in China, where labor shortages and strikes have some western companies seriously considering a return of mass production manufacturing back to the United States?
The Cardinal Crisis
American Middle-Class Being Wiped Out?
By Michael Snyder
The Business Insider
The 22 statistics detailed below prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.
The rich are getting richer and the poor are getting poorer at a staggering rate.
Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.
Why are we witnessing such fundamental changes?
Well, the globalism and "free trade" that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects.
It turns out that they didn't tell us that the "global economy" would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations.
The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.
Here are the statistics to prove it:
The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world.
After all, what corporation in their right mind is going to pay an American worker 10 times more (plus benefits) to do the same job?
The world is fundamentally changing. Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money.
Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new "global" labor pool.
What do most Americans have to offer in the marketplace other than their labor? Not much.
The truth is that most Americans are absolutely dependent on someone else giving them a job.
But today, U.S. workers are "less attractive" than ever. Compared to the rest of the world, American workers are extremely expensive, and the government keeps passing more rules and regulations seemingly on a monthly basis that makes it even more difficult to conduct business in the United States.
So corporations are moving operations out of the U.S. at breathtaking speed. Since the U.S. government does not penalize them for doing so, there really is no incentive for them to stay.
What has developed is a situation where the people at the top are doing quite well, while most Americans are finding it increasingly difficult to make it.
There are now about six unemployed Americans for every new job opening in the United States, and the number of "chronically unemployed" is absolutely soaring.
There simply are not nearly enough jobs for everyone.
Many of those who are able to get jobs are finding that they are making less money than they used to.
In fact, an increasingly large percentage of Americans are working at low wage retail and service jobs.
But you can't raise a family on what you make flipping burgers at McDonald's or on what you bring in from greeting customers down at the local Wal-Mart.
The truth is that the middle class in America is dying -- and once it is gone it will be incredibly difficult to rebuild."
~
Mundane Analysis
It has been my contention for some years that the earth would enter a transition phase which would then turn with the advent of the Cardinal transits by 2008 and continue through the new decade of the 2010s to the next Saturn/Pluto conjunction in 2020.
The American statistics cited above prove this to be true.
For years, Wall Street firms, hedge fund players, and international bankers have depended on a mathematical formula of variables to make huge sums of money in the derivatives market.
In astrology, we deal with multiple variables. This is because all planetary bodies, the stars, the Sun, and the Moon are always in motion.
Because of this fact, astrology is a very difficult field for most because of the every-changing mathematical interactions between moving bodies along various lines of declination. It is variable mathematics in its highest form.
A trained astrologer will require at least 20-30 years of knowledge and experience to gain enough insight required to extensively forecast; especially in mundane astrology.
The patterns observed, and studied, show astrologers what is more likely to occur, and what is less likely to occur, always through the science of celestial transits relative to the Earth over periods of time.
On the sector of the world economy, forecasts by rationalist financial engineers, some who despise astrology but never studied the science in any depth, turned towards using mathematical shortcuts in an attempt to do what astrologers have been doing well for centuries - accurate forecasting.
Wall Street hired these rationalist "quant mathematicians" to improve profits.
In effect, though the financial community had no actual historical data to base their investment forecasts on economic correlation, a shortcut was taken, based on less than 10 years of data on a corrupted, and bubble priced real estate market, which then led to the near collapse of the world economy.
We discover that this shortcut, or the "formula," was primarily the result of the work of a single mathematician.
David X. Li, born in China in the 1960s, became a quantitative analyst and a qualified actuary who, in the early 2000s had pioneered the use of what he called Gaussian Copula models for pricing of collateralized debt obligations (CDO)
But, in the wake of the global Bank Crisis, and the resulting economic crisis, Li's model now has been called a "recipe for disaster."
Li was quoted as saying about his disastrous financial model that:
"The most dangerous part is when people believe everything coming out of it."
Unquote.
For more, see ~ The Formula That Killed Wall Street.
Li left his celebrity forecaster status in the United States, and is now working in Beijing, China.
What also makes the above somber statistics even more confusing and sad is the fact that while China has benefited from the Baby Boomer corporate/political establishment moving quality American manufacturing to Asia for cheap workers, we now witness China suffering signs of a labor shortage?
The rich are getting richer and the poor are getting poorer at a staggering rate.
Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.
Why are we witnessing such fundamental changes?
Well, the globalism and "free trade" that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects.
It turns out that they didn't tell us that the "global economy" would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations.
The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.
Here are the statistics to prove it:
- 83 percent of all U.S. stocks are in the hands of 1 percent of the people.
- 61 percent of Americans "always or usually" live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
- 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.
- 36 percent of Americans say that they don't contribute anything to retirement savings.
- A staggering 43 percent of Americans have less than $10,000 saved up for retirement.
- 24 percent of American workers say that they have postponed their planned retirement age in the past year.
- Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
- Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
- For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
- In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
- As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.
- The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
- Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
- In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.
- The top 1 percent of U.S. households own nearly twice as much of America's corporate wealth as they did just 15 years ago.
- In America today, the average time needed to find a job has risen to a record 35.2 weeks.
- More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.
- For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.
- This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.
- Approximately 21 percent of all children in the United States are living below the poverty line in 2010 - the highest rate in 20 years.
- Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.
- The top 10 percent of Americans now earn around 50 percent of our national income.
The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world.
After all, what corporation in their right mind is going to pay an American worker 10 times more (plus benefits) to do the same job?
The world is fundamentally changing. Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money.
Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new "global" labor pool.
What do most Americans have to offer in the marketplace other than their labor? Not much.
The truth is that most Americans are absolutely dependent on someone else giving them a job.
But today, U.S. workers are "less attractive" than ever. Compared to the rest of the world, American workers are extremely expensive, and the government keeps passing more rules and regulations seemingly on a monthly basis that makes it even more difficult to conduct business in the United States.
So corporations are moving operations out of the U.S. at breathtaking speed. Since the U.S. government does not penalize them for doing so, there really is no incentive for them to stay.
What has developed is a situation where the people at the top are doing quite well, while most Americans are finding it increasingly difficult to make it.
There are now about six unemployed Americans for every new job opening in the United States, and the number of "chronically unemployed" is absolutely soaring.
There simply are not nearly enough jobs for everyone.
Many of those who are able to get jobs are finding that they are making less money than they used to.
In fact, an increasingly large percentage of Americans are working at low wage retail and service jobs.
But you can't raise a family on what you make flipping burgers at McDonald's or on what you bring in from greeting customers down at the local Wal-Mart.
The truth is that the middle class in America is dying -- and once it is gone it will be incredibly difficult to rebuild."
~
Mundane Analysis
It has been my contention for some years that the earth would enter a transition phase which would then turn with the advent of the Cardinal transits by 2008 and continue through the new decade of the 2010s to the next Saturn/Pluto conjunction in 2020.
The American statistics cited above prove this to be true.
For years, Wall Street firms, hedge fund players, and international bankers have depended on a mathematical formula of variables to make huge sums of money in the derivatives market.
In astrology, we deal with multiple variables. This is because all planetary bodies, the stars, the Sun, and the Moon are always in motion.
Because of this fact, astrology is a very difficult field for most because of the every-changing mathematical interactions between moving bodies along various lines of declination. It is variable mathematics in its highest form.
A trained astrologer will require at least 20-30 years of knowledge and experience to gain enough insight required to extensively forecast; especially in mundane astrology.
The patterns observed, and studied, show astrologers what is more likely to occur, and what is less likely to occur, always through the science of celestial transits relative to the Earth over periods of time.
On the sector of the world economy, forecasts by rationalist financial engineers, some who despise astrology but never studied the science in any depth, turned towards using mathematical shortcuts in an attempt to do what astrologers have been doing well for centuries - accurate forecasting.
Wall Street hired these rationalist "quant mathematicians" to improve profits.
In effect, though the financial community had no actual historical data to base their investment forecasts on economic correlation, a shortcut was taken, based on less than 10 years of data on a corrupted, and bubble priced real estate market, which then led to the near collapse of the world economy.
We discover that this shortcut, or the "formula," was primarily the result of the work of a single mathematician.
David X. Li, born in China in the 1960s, became a quantitative analyst and a qualified actuary who, in the early 2000s had pioneered the use of what he called Gaussian Copula models for pricing of collateralized debt obligations (CDO)
But, in the wake of the global Bank Crisis, and the resulting economic crisis, Li's model now has been called a "recipe for disaster."
Li was quoted as saying about his disastrous financial model that:
"The most dangerous part is when people believe everything coming out of it."
Unquote.
For more, see ~ The Formula That Killed Wall Street.
Li left his celebrity forecaster status in the United States, and is now working in Beijing, China.
What also makes the above somber statistics even more confusing and sad is the fact that while China has benefited from the Baby Boomer corporate/political establishment moving quality American manufacturing to Asia for cheap workers, we now witness China suffering signs of a labor shortage?
This next feature highlights a mundane forecast made over three years ago where I pointed out that China would lose its primary hold on cheap manufacturing, and suffer a labor shortage that would return quality manufacturing gradually back to the United States.
The Saturn/Pluto square, highlighted in the July 23 feature of Global Astrology detailed the business climate from the last waning square of the 1982 Saturn/Pluto cycle to the new conjunction in 2020.
China's problems are typical to countries in transition. The economic crisis, as it is called, sees global trade not fractured, but de-fragmenting.
In order to keep up, nations have to train and educate workforces to meet the new demands of the times.
We are currently in one such cycle.
We are currently in one such cycle.
The Cardinal Crisis
Brace For The End of Made-In-China Era?
A Chinese garment worker at a factory in Pinghu, near Shanghai, China.
Credit: Philippe Lopez/AFP/Getty
By
Associated Press
July 2010-- SHANGHAI, CHINA -- Factory workers demanding better wages and working conditions are hastening the eventual end of an era of cheap costs that helped make southern coastal China the world's factory floor.
A series of strikes over the past two months have been a rude wakeup call for the many foreign companies that depend on China's low costs to compete overseas, from makers of Christmas trees to manufacturers of gadgets like the iPad.
Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers are now demanding a bigger share of the profits.
The government, meanwhile, is pushing foreign companies to make investments in areas it believes will create greater wealth for China, like high technology.
Many companies are striving to stay profitable by shifting factories to cheaper areas farther inland or to other developing countries, and a few are even resuming production in the West.
"China is going to go through a very dramatic period. The big companies are starting to exit. We all see the writing on the wall," said Rick Goodwin, a China trade veteran of 22 years, whose company links foreign buyers with Chinese suppliers.
"I have 15 major clients. My job is to give the best advice I can give. I tell it like it is. I tell them, put your helmet on, it's going to get ugly," said Goodwin, who says dissatisfied workers and hard-to-predict exchange rates are his top worries.
Beijing's decision to stop tethering the Chinese currency to the U.S. dollar, allowing it to appreciate and thus boosting costs in yuan, has multiplied the uncertainty for companies already struggling with meager profit margins.
In an about-face mocked on "The Daily Show with Jon Stewart," Wham-O, the company that created the Hula-Hoop and Slip 'n Slide, decided to bring half of its Frisbee production and some production of its other products back to the U.S.
At the other end of the scale, some in research-intensive sectors such as pharmaceutical, biotech and other life sciences companies are also reconsidering China for a range of reasons, including costs and incentives being offered in other countries.
"Life sciences companies have shifted some production back to the U.S. from China. In some cases, the U.S. was becoming cheaper," said Sean Correll, director of consulting services for Burlington, Mass.-based Emptoris.
That may soon become true for publishers, too. Printing a 9-by-9-inch, 334-page hardcover book in China costs about 44 to 45 cents now, with another 3 cents for shipping, says Goodwin. The same book costs 65 to 68 cents to make in the U.S.
"If costs go up by half, it's about the same price as in the U.S. And you don't have 30 days on the water in shipping," he says.
China's small businesses struggle to adapt to survive the global bank crisis. Chinese workers stitch teddy bears at a toy factory in Shenzhen.
Agence France-Presse/Getty Images
Even with recent increases, wages for Chinese workers are still a fraction of those for Americans. But studies do show China's overall cost advantage is shrinking.
Labor costs have been climbing about 15 percent a year since a 2008 labor contract law that made workers more aware of their rights. Tax preferences for foreign companies ended in 2007.
Land, water, energy and shipping costs are on the rise.
In its most recent survey, issued in February, restructuring firm Alix Partners found that overall China was more expensive than Mexico, India, Vietnam, Russia and Romania.
Mexico, in particular, has gained an edge thanks to the North American Free Trade Agreement and fast, inexpensive trucking, says Mike Romeri, an executive with Emptoris, the consulting firm.
Makers of toys and trinkets, Christmas trees and cheap shoes already have folded by the thousands or moved away, some to Vietnam, Indonesia or Cambodia.
But those countries lack the huge work force, infrastructure and markets China can offer, and most face the same labor issues as China.
So far, the biggest impact appears to be in and around Shenzhen, a former fishing village in Guangdong province, bordering Hong Kong, that is home to thousands of export manufacturers.
That includes Taiwan-based Foxconn Technology, a supplier of iPhones and iPads to Apple Inc.
Foxconn responded to a spate of suicides at its 400,000-worker Shenzhen complex with pay hikes that more than doubled basic monthly worker salaries to $290.
Strike-stricken suppliers to Honda Motor Co. and Toyota Motor Corp., among many others, also have hiked wages.
Foxconn refused repeated requests for comment on plans to move much of its manufacturing capacity to central China's impoverished Henan province, where a local government website has advertised for tens of thousands of workers on its behalf.
But among other projects farther inland, Foxconn is teaming up with some of the biggest global computer makers to build what may be the world's largest laptop production hub in Chongqing, a western China city of 32 million where labor costs are estimated to be 20 to 40 percent lower than in coastal cities.
Given the intricate supply chains and logistics systems that have helped make southern China an export manufacturing powerhouse, such changes won't be easy.
But for manufacturers looking to boost sales inside fast-growing China, shifting production to the inland areas where many migrant workers come from, and costs are lower, offers the most realistic alternative.
"The new game is to find a way to do the domestic market," says Goodwin.
Many factories in Foshan, another city in Guangdong that saw strikes at auto parts plants supplying Japan's Honda, have left in the past few months, mostly moving inland to Henan, Hunan and Jiangxi, said Lin Liyuan, dean at the privately run Institute of Territorial Economics in Guangzhou.
Massive investments in roads, railways and other infrastructure are reducing the isolation of the inland cities, part of a decade-old "Develop the West" strategy aimed at shrinking the huge, politically volatile gap in wealth between city dwellers and the country's 600 million farmers.
Gambling that the unrest will not spill over from foreign-owned factories, China's leaders are using the chance to push investment in regions that have lagged the country's industrial boom.
They have little choice.
Many of today's factory workers have higher ambitions than their parents, who generally saved their earnings from assembling toys and television sets for retirement in their rural hometowns.
Many of today's factory workers have higher ambitions than their parents, who generally saved their earnings from assembling toys and television sets for retirement in their rural hometowns.
They are also choosier about wages and working conditions.
"The conflicts are challenging the current set-up of low-wage, low-tech manufacturing, and may catalyze the transformation of China's industrial sector," said Yu Hai, a sociology professor at Shanghai's Fudan University."
~
The high jobless rate as the Saturn/Pluto waning square begins in earnest in July 2010 will be stubbornly high until the generational transition is completed in the early years of the new decade.
The economy went south, as tens of millions of people struggle to survive as the volume of work continues to drop dramatically even as the need for infrastructure rebuilding and business expansion grows.
My general forecast shows the United States, Asia, Europe, and other nations continuing to feel the pinch of the contracted business climate.
I expect a slower recovery as the waning Saturn/Pluto cycle plays out. Each major aspect of the general 38-year cycle is broken down in 9.5 years.
The main story of this cycle will be the revelations of the major banks roles in the economic crisis and why the lenders of the past 18 years are not fit to manage their institutions.
Despite this, global transits shows a surprising uptick in the sector of dry bulk commodities just ahead.
Vincent Fernando reports July 26, 2010
The Business Insider
Iron ore forwards have had an extremely strong week, according to data from the Iron Ore & Steel Derivatives Association.
August 2010 forwards have had the largest gains, indicating expectations of a near-term rebound:
Despite concerns about Chinese demand growth, higher stockpiles of steel, a global growth slow-down, and Chinese plans to consolidate its steel industry into fewer players, iron ore and steel are rallying.
Where there's demand for steel, there's demand for many other commodities as well.
There's also demand for ships.
This, combined with a stabilized Baltic Dry Index and today's overall stock market rally, means it's a sea of green for dry bulk stocks today.
August & September could get interesting for the commodities space."
~
The Cardinal Crisis
You Know You Are In A Depression When...?
By David Rosenberg, Chief Economic Strategist
Gluskin Sheff & Associates
"Congress moved to extend jobless benefits seven times, as has been the case over the past two years, at a time when almost half of the ranks of the unemployed have been looking for at least a half year.
The unemployment rate for adult males (25-54 years) hit a post-WWII this cycle and is still above the 1982 recession peak, and the youth unemployment rate is stuck near 25%.
The unemployment rate for adult males (25-54 years) hit a post-WWII this cycle and is still above the 1982 recession peak, and the youth unemployment rate is stuck near 25%.
These developments will have profound long-term consequences – social, economic and political.
The fiscal costs of the depression continue to mount, with the White House on Friday raising its deficit projection for 2011 to $1.4 trillion from $1.267 trillion.
That gap in the forecast – $133 billion – was close to the size of the entire budget deficit back in 2002.
That gap in the forecast – $133 billion – was close to the size of the entire budget deficit back in 2002.
Amazing.
You also know it is a depression when you find out on the weekend that the FDIC seized and shuttered another seven banks, making it 103 closures for the year.
What a recovery!
Meanwhile, how are the surviving banks making money?
By cutting their provisions for bad debts (at a time when the household debt/income ratio is still near record highs of 120% and at a time when one-quarter of the consumer universe has a sub-600 FICO score – which means they are also ineligible for
By cutting their provisions for bad debts (at a time when the household debt/income ratio is still near record highs of 120% and at a time when one-quarter of the consumer universe has a sub-600 FICO score – which means they are also ineligible for
Fannie or Freddie mortgage financing.
The banks thus far have reduced their loan loss reserves between 23% (Cap One) and 73% (First Horizon) – as Jamie Dimon said last week - these are not real earnings.
You also know it's a depression when a year into a statistical recovery, the central bank is still openly contemplating ways to stimulate growth.
The Fed was supposed to have already started the process of shrinking its pregnant balance sheet four months ago and is now instead thinking of restarting Quantitative Easing.
The Fed was supposed to have already started the process of shrinking its pregnant balance sheet four months ago and is now instead thinking of restarting Quantitative Easing.
Of course, we are in this bizarre environment where bank credit continues to contract – last week alone, bank wide consumer credit outstanding fell $2.2 billion; real estate lending contracted $9.2 billion; and commercial & industrial loans slid $5.1 billion.
click on graphic to enlarge
What did the banks do this past week?
They replaced cash with government
What did the banks do this past week?
They replaced cash with government
securities – the $47.5 billion net buying was the second largest in the past three
years.
As the banks find few opportunities to lend – households are either not
years.
As the banks find few opportunities to lend – households are either not
creditworthy enough to lend to or are busy paying off debts and companies that do have any expansion plans have enough cash on their balance sheet to
finance their initiatives.
finance their initiatives.
They are likely to use their $1 trillion in excess reserves buying government and related securities, especially with the yield curve so steep and the Fed ensuring that it has no intention of taking the 'carry' away for a long, long time.
Did we mention that you also know you are in some sort of depression when
Did we mention that you also know you are in some sort of depression when
after two years of record $1+ trillion deficit financing to kick-start the economy, the yield on the 5-year note is sitting at 1.8%?
What do you think that tells you?
It tells you that the private credit market is basically defunct, especially when it comes to the securitized loans, which played such a critical role in promoting leveraged economic growth from 2001 to 2007.
The amount of securitized credit that has vanished since the credit bubble burst two years ago is $1.4 trillion – 40% of this market is gone.
The amount of securitized credit that has vanished since the credit bubble burst two years ago is $1.4 trillion – 40% of this market is gone.
And what replaced it was this rampant government intervention into the economy aimed at putting a floor under the economy.
But insofar as the government stimulus fades and the contraction in credit persists, it will be interesting to see what sort of spending, output and income growth we are going to see in the near- and intermediate-term."
Posts
