GM to slash 14,700 jobs in North America

11/26/2018

The Confirmation Files Business, Economy, Politics , , , Leave a comment

General Motors
By TOM KRISHER and ROB GILLIES, Associated Press Writers

General Motors will lay off 14,700 factory and white-collar workers in North America and put five plants up for possible closure as it restructures to cut costs and focus more on autonomous and electric vehicles.
The reduction includes 8,100 white-collar workers, some of whom will take buyouts and others who will be laid off. Most of the affected factories build cars that won’t be sold in the U.S. after next year. They could close or they could get different vehicles to build. They will be part of contract talks with the United Auto Workers union next year.
Plants without products include assembly plants in Detroit; Lordstown, Ohio; and Oshawa, Ontario. Also affected are transmission factories in Warren, Michigan, as well as Baltimore.
About 6,000 factory workers could lose jobs in the U.S. and Canada, although some could transfer to truck plants.
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General Motors is closing a Canadian plant at the cost of about 2,500 jobs, but that is apparently just a piece of a much broader, company-wide restructuring that will be announced as early as Monday.

A person briefed on the matter told The Associated Press that the plant being shuttered in Canada is just the beginning as GM prepares for the next economic downturn, shifting trade agreements under the Trump administration, and potential tariffs on imported automobiles.
The official spoke on condition of anonymity because the announcement hasn’t been made public.
In the fall, the Detroit automaker offered buyouts to 18,000 white collar workers, but it has yet to say how many accepted, or if it’s close to meeting the staff reduction goals it set to better withstand leaner times.
The Monday closure of GM’s plant in Oshawa, Ontario, was confirmed late Sunday by an official familiar with the decision. The official spoke on condition of anonymity because they were not authorized to talk publicly ahead of the announcement.
GM needs to reshape the company as it shifts its focus to lower emitting hybrid vehicles, technology that is not at the forefront at the Canadian plant.
Too many GM factories are devoted to making slow-selling cars and the company can no longer afford to keep them all operating without making some tough decisions. But the political atmosphere might limit realistic choices for the Detroit automaker.

Industry analysts are already plotting out possible targets for GM, including its sprawling Lordstown plant in northeastern Ohio. The car produced there is also is built in Mexico. The once-bustling factory already has lost two of its three shifts and 3,000 union jobs since the beginning of last year.
But moving that car, the Chevrolet Cruze, south of the border brings the risk of provoking a backlash from President Donald Trump. And GM also isn’t sure whether he’ll make good on threats to impose 25 percent tariffs on vehicles imported from Canada and Mexico.
What’s more, the Cruze plant just outside Youngtown is in a Democratic and labor stronghold, where Trump won over a surprising number of voters two years ago by reaching out to what he called America’s “forgotten men and women.”
At a rally near the plant last summer, Trump talked about passing by big factories whose jobs “have left Ohio,” then told people not to sell their homes because the jobs are “coming back. They’re all coming back.”
Altogether, GM has five car factories with plenty of unused capacity in Kansas City, Kansas; Lordstown; and Detroit-Hamtramck, Lansing, and Orion Township, Michigan.

GM opened its factory in Oshawa, near Toronto, in 1953. The plant is used to make the Cadillac XTS and Chevrolet Impala sedans as well as the Chevrolet Silverado and GMC Sierra trucks.
A GM spokesman declined to comment. GM had been expected to close plants because of struggling sales.
Unifor, Canada’s largest private sector union, said in a prepared statement that it does not have complete details of Monday’s announcement, but it has been informed that there is no product allocated to the Oshawa plant past December 2019.
“Based on commitments made during 2016 contract negotiations, Unifor does not accept this announcement and is immediately calling on GM to live up to the spirit of that agreement,” the union said in a statement on its website.
“Unifor is scheduled to hold a discussion with General Motors (Monday) and will provide further comment following the meeting.”
Oshawa Mayor John Henry said he had not spoken to anyone from GM. Jennifer French, who represents Oshawa in the provincial legislature, said she finds the news “gravely concerning.”
“If GM Canada is indeed turning its back on 100 years of industry and community — abandoning workers and families in Oshawa — then this is a callous decision that must be fought,” she said in a statement.

By TOM KRISHER and ROB GILLIES/Associated Press

Posted by The NON-Conformist

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Is the Air Coming Out of Housing Bubble 2.0?

11/16/2018

The Confirmation Files Business, Economy, Politics , Leave a comment

Peter Schiff put it pretty bluntly in a podcast last week. We don’t have a booming economy. We have bubbles. And it looks like the air is starting to come out of some of those bubbles. We see signs of trouble, particularly in interest rate-sensitive sectors such as real estate. As just one example, home sales in California have hit the lowest level in a decade. And it’s not just California. We’re seeing declines in many of the “most splendid housing bubbles” in America. Even more troubling is that we’re seeing these tremors and interest rates aren’t historically high.

Yet.

But they are rising quickly. According to an article in Wolf Street, they may soon hit 6% and that could be the real tipping point.

Mortgage rates have eclipsed the 5% level. According to the Mortgage Bankers Association, the average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) and a 20% down-payment rose to 5.17% for the latest reporting week. That marks the highest rate since September 2009.

The next stop is 6%. As Wolf Street notes, that was the mortgage rate in December 2008.

Of course, rising rates are by design. The Federal Reserve has nudged the rate upward, and it is also shedding Treasuries and mortgage-backed securities. Here’s the impact we’ve seen since the beginning of the year, according to Wolf Street.

  • The 30-year mortgage interest rate has risen 95 basis points, or nearly 1 percentage point (from 4.22% to 5.17%).
  • The 10-year Treasury yield has risen 71 basis points (from 2.46% to 3.17%)
  • The spread between the two has widened from 176 basis points on at the beginning of January to 200 basis points now.

In other words, mortgage rates are climbing faster than the 10-year Treasury yield, now that the Fed has begun the shed mortgage-backed securities. This is expected. It’s part of the QE unwind – it’s part of the Fed exiting the mortgage market and pulling its support out from under it.”

Keep in mind, 6% is still historically low.

Here’s another disturbing piece of the puzzle. Home prices have risen precipitously and have eclipsed levels seen just prior to the housing bust. Average home prices nationwide have surged 11.5% above the crazy peak of housing bubble number one. In a nutshell, we’re looking at housing bubble 2.0.

As Wolf Street notes, even at relatively modest 5% mortgage rates, we’re seeing an impact on the housing market with significant pressure building on the margin, “with some potential buyers being locked out and others scared off as they’re finding today’s inflated home prices don’t mix well with even slighter higher mortgage rates: What was barely affordable for them, with a good amount of stretching, has become unaffordable.”

Wolf Street predicts the real pain will kick in as the mortgage rate approaches 6%. And that is likely less than a year away at the current rate.

Six percent will block enough potential buyers from buying at current prices to where sellers will have serious trouble selling their homes unless prices drop enough. The cure for this market will be lower prices – even if it means rising defaults and considerable problems among mortgage lenders, particularly the non-bank lenders (the “shadow banks”) that have very aggressively moved into the mortgage market over the last few years. Quicken Loans has now become the largest mortgage lender in the US, ahead of Wells Fargo. These shadow banks are less regulated and have taken more risks than the banks. The Fed is already worried about them but worrying is all it can do since it doesn’t regulate them.”

This is just one sector of the economy, but it’s indicative of what’s going on more broadly. While the mainstream touts the “economic boom,” there is underlying rot that rising rates are about to expose. As Peter said, the housing market is a leading indicator of the impact of rising interest rates.

If the US economy is really going to stay strong and if interest rates are going to keep rising, how is it possible that the economy can continue to stay strong with high interest rates when the economy, or the strength of the economy, is predicated on debt?”

by SchiffGold

Posted by The NON-Conformist

The Fascists Are Coming for Your Social Security and Medicare

10/24/2018

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The billionaire fascists are coming for your Social Security, Medicare and Medicaid. And they’re openly bragging about it.

Right after Trump’s election, back in December of 2016, Newt Gingrich openly bragged at the Heritage Foundation that the Trump administration and Republicans in Congress were going to “break out of the Franklin Delano Roosevelt model.” That “model,” of course, created what we today refer to as “the middle class.”

This week Mitch McConnell confirmed Gingrich’s prophecy, using the huge deficits created by Trump’s billionaire tax cuts as an excuse to destroy “entitlement” programs.

“I think it would be safe to say that the single biggest disappointment of my time in Congress has been our failure to address the entitlement issue, and it’s a shame, because now the Democrats are promising Medicare for All,” McConnell told Bloomberg. He added, “[W]e’re talking about Medicare, Social Security and Medicaid.”

These programs, along with free public education and progressive taxation, are the core drivers and maintainers of the American middle class. History shows that without a strong middle class, democracy itself collapses, and fascism is the next step down a long and terrible road.

Ever since the election of Ronald Reagan, Republicans have been working overtime to kneecap institutions that support the American middle class. And, as any working-class family can tell you, the GOP has had some substantial successes, particularly in shifting both income and political power away from voters and toward billionaires and transnational corporations.

More from Thom Hartmann @ Common Dreams

Posted by Libergirl

It’s Official: 2018 Federal Deficit Largest Since 2012 The federal government spent $790 billion more than it taxed during fiscal year 2018. The deficit is about to get worse. Much worse.

10/17/2018

The Confirmation Files Business, Economy, government, Politics , , Leave a comment

The federal government finished the 2018 fiscal year—it ended on September 30—a whopping $779 billion in the red, the largest annual budget deficit since 2012.

The current fiscal year is likely to see an even larger deficit, potentially in excess of $1 trillion.

The Treasury Department’s final data for the 2018 fiscal year, released Monday, shows that the deficit was driven by a combination of higher spending and additional borrowing. The latter was necessary to finance the former, of course, though last year’s tax cuts contributed to the widening gap between how much money the federal government takes in and how much it spends.

Tax revenues were flat during 2018 and corporate tax collections fell by $76 billion, Treasury reported.

On it’s own, the fact that American companies were able to keep $76 billion out of the government’s hands is cause for celebration. Those funds will certainly be put to more productive uses because they won’t be funneled to Washington. Trump’s corporate tax cuts brought the United States in line with the rest of the world, thereby increasing U.S. competitiveness in a global market.

But tax cuts without spending cuts are a recipe for disaster. While the Treasury’s data for fiscal year 2018 looks backwards, the trajectory for the future is the bigger story.

The $779 billion deficit for fiscal year 2018 was up 17 percent from the $666 billion deficit recorded in fiscal year 2017. The data show that the deficit is growing faster than the economy as a whole. In 2017, the federal deficit was equal to 3.5 percent of gross domestic product (GDP), but grew to 3.9 percent of GDP in 2018.

According to the Congressional Budget Office, current policies have the United States on course for a $2 trillion deficit before the end of the next decade.

“It’s an unsustainable fiscal course that will lead us to debt overtaking the size of the entire economy in as soon as a decade, and not long after topping all-time highs as a share of the economy not seen since World War II,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which advocates for balancing the budget, in a statement.

Driven by old-age entitlements and surfing on a wave of retiring boomers, the federal government will continue to pile on more debt unless serious structural reforms are undertaken. A new analysis from longtime congressional budget aide Brian Riedl, now a senior fellow at the Manhattan Institute, a free market think tank, shows that Social Security and Medicare will run a $100 trillion deficit over the next 30 years. With the country already facing a national debt of more than $20 trillion, massive annual deficits in future years are likely to drive-up the cost of borrowing and cause America’s already astronomical debt to grow at a faster pace, he warns.

That this latest increase in the deficit happened during a period when Republicans had full control of the federal government reveals that they were never very serious about balancing the budget. Even now, they refuse to recognize the problem. Democrats, meanwhile, are promising to spend even more on entitlements, if and when they return to power.

Almost nothing about the current state of affairs in Washington suggests that policy makers are prepared to deal with this looming catastrophe. Today’s news is a reminder that the reckoning is coming, regardless of whether our elected officials are ready for it.

By Eric Boehm/Reason

Posted by The NON-Conformist

Donald Trump’s grotesque fraud

10/04/2018

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When Donald Trump set up Trump University, he promised to share his “secrets of success.” He said he would tell people how they could “just copy exactly what I’ve done and get rich.” It was a fraud. Now, courtesy of the New York Times, we know for certain it could never be anything but a fraud. The only knowledge Trump can impart to anyone about wealth is an unteachable skill: have rich parents.

As the Times’s investigation revealed, Trump’s success depended on massive transfers of family wealth from his father, real estate developer Fred Trump. Ultimately, Fred Trump gave hundreds of millions of dollars to his children, a staggering amount turbocharged, as the Times reported in extensive detail, reportedly by fraud. By age 3, the Times reports, the young Donald Trump received an income that was the equivalent of $200,000 in today’s dollars from his dad. He was a millionaire before finishing elementary school. The largesse continued into adulthood. He even paid for the adult Donald’s car, and Manhattan offices — the same ones where the future president gave interviews claiming business genius.

The story Trump told on the campaign trail, about how he received only a “small” $1 million loan from his dad to build his business — and one Fred Trump made him pay back. “It has not been easy for me,” he whined. Garbage. The Times reports that the senior Trump loaned his son $60.7 million at a minimum, most of which was never repaid.

So why the pretense? Well, Americans love the myth of the self-made man. A foundational belief in our culture is that anyone can become a millionaire — or even better, a billionaire — with just the right amount of hard work, gumption and smarts. There is an idea that the person who goes out and makes himself — and it is almost always a man — a fortune is somehow a more skilled and smarter human being, capable of using his skill in one industry to master another.

Americans love this myth despite evidence that it is widely exaggerated. The United States has less class mobility than many European nations, but Americans think we enjoy more. In the United States, the quickest and easiest way to make it to the 1 percent of wealth holders and remain in that world is to be born into it.

One reason we might love this myth as much as we do: It allows us to avoid hard discussions about the reality of class in the United States. All too many Americans, the beneficiaries of what I like to call the upper-middle-class welfare state, can convince themselves that they are uniquely deserving. When Jessica Wiederspan, now a researcher studying basic income with Y Combinator, interviewed working- and middle-class families in Rust Belt states, she found many in absolute denial about what their financial backers accomplished for them. One woman, the recipient of family aid that permitted her everything from a nice home (with a mortgage in her mother-in-law’s name) to soccer lessons and summer camp for her children, told the researcher she believed the vast majority of people who did well in the United States, “are people who are willing to work for what they want.” As for the others, she sniffed, “they expect handouts to get from here to here.”

In fact, as both Wiederspan’s research and the Times story shows, it is frequently the rich and well-to-d0 who seek handouts without copping to it. It is the Trump administration that signed into law a tax-reform package that gave the typical worker a tiny and time-limited tax cut, while showering the wealthiest with a massive and permanent cut. It is the Trump administration that is seeking to make staggering cuts in social safety-net programs, such as Medicaid and food stamps, which is the only help available for people who hit a rough patch or are mired in poverty. At the same time, it is the Trump family — and no doubt many other families — who seek to skip out on paying taxes, money that can be used to help those who lack their financial advantages. That too many Americans tacitly accept this reality allows frauds such as Trump to flourish.

By Helaine Olen/WAPO

Posted by The NON-Conformist

Here’s What Congress Was Doing While You Were Watching the Kavanaugh Circus The passage of tax reform 2.0 blows a huge hole in the budget, and a much-touted opioid bill might just make the crisis worse.

09/29/2018

The Confirmation Files Economy, government, Politics , , , Leave a comment

While much attention was diverted by the political circus surrounding Judge Brett Kavanaugh on Thursday and Friday, Congress passed a massive spending bill and another round of tax cuts that will combine to blow an even bigger hole in the federal budget. Lawmakers also found time to pass a bill restricting Americans’ access to prescription painkillers, something that’s likely to force people who are dependent on or addicted to opioids (a distinction seemingly lost on legislators) to seek out more dangerous alternatives.

Let’s start with the spending: Friday’s passage of the House Republican’s so-called Tax Reform 2.0 proposal will likely get heavy rotation in campaign ads over the next five weeks, even though the bill faces an uncertain future in the Senate. The bill does several things, but the key part of the proposal is the permanent extension of the individual and corporate income tax rate cuts enacted last year. Those lower rates are set to expire after 2025—reverting to their previous levels—but Republicans have been aiming for a permanent extension since before the final votes were cast on last year’s tax bill.

If Republicans still cared about deficits, Tax Reform 2.0 would be a non-starter. Having last year’s tax cuts expire in the middle of the next decade was a maneuver (or a gimmick, if you prefer) designed to limit the impact of tax reform on future deficits and the national debt.

Unsurprisingly, then, extending those tax cuts will add to the deficit. According to an analysis by the Joint Committee on Taxation, a nonpartisan number-crunching agency within Congress, the bill will add $631 billion to the deficit over a decade. While the JCT says an extension of the tax cuts will cause the economy to grow by about 0.5 percent in the years immediately after 2025, additional revenue from that growth will cancel out a mere $86 billion of the tax cut’s impact on the deficit. Other analyses of the bill by the left-leaning Tax Policy Center and the right-leaning Tax Foundation make similar estimates about the long-term effect on revenue.

The bottom line? Even when accounting for increased economic growth, Tax Reform 2.0 comes with a price tag of more than $500 billion added to the deficit—an amount future taxpayers will have to cover.

The bill is not without its charms. A proposal to created so-called universal savings accounts would allow Americans to create tax-advantaged savings accounts where they could stash up to $5,000 annually without having to deal with all the restrictions and limitations that come with similarly structured 401(k) and IRA plans now. Encouraging savings—especially savings that are partially sheltered from the tax man—would be a positive step that helps families plan for the future.

But if you needed further evidence that Congress doesn’t give a damn about planning for the country’s future, look no further than the passage this week, in both houses, of a $853 billion spending bill. About $600 million of the spending is directed towards the Pentagon—boosting the military budget to levels not seen since the height of the Iraq War.

The bill is now on its way to President Donald Trump’s desk. He must sign it before October 1 to avoid a government shutdown, which might be complicated by the lack of funding for his border wall.

The spending bill has raised the ire of the few fiscally conservative Republicans who sit in Congress. Rep. Justin Amash (R-Mich.) encouraged Trump not to sign the bill and blasted his fellow lawmakers for being “far worse than the politicians they once derided.”

Justin Amash

This gigantic, wasteful, pathetic spending bill passed the House and Senate. @POTUS @realDonaldTrump said, “I will never sign another bill like this again,” about the last bill like this, the omnibus. He’ll now be put to the test.

$850 BILLION of spending in one year in one bill—and Republican leaders have been bragging to everyone about this massive spending increase. Vote is TODAY. The same Republicans who used to blast GWB’s spendthrift GOP have become far worse than the politicians they once derided.

While the Kavanaugh hearings devolved into partisan acrimony, Congress was also serving up reminders of what happens when nearly everyone agrees. The Tax Reform 2.0 vote went mostly party line, but spending an obscene amount of money was, once again, a bipartisan affair in both the House and Senate.

So, too, was the passage of the Support for Patients and Communities Act, a much-touted bipartisan effort to address the opioid crisis in the most congressional of ways: by throwing money and more prohibition at the problem.

The final version of the bill, which passed the House 393-8 on Friday and now heads to the Senate, will spend about $8 billion on state-run opioid treatment centers and research into non-opioid pain killers. It also beefed up border security in the name of stopping the importation of illicitly manufactured fentanyl and other lab-made drugs.

But the bill may unintentionally increase demand for fentanyl and other drugs used by opioid addicts who can’t get a legal fix. Several provisions in the proposal would restrict access to prescription painkillers; other aspects of the legislation would increase penalties for drug manufacturers and doctors deemed to have over-sold and over-prescribed opioids.

As J.J. Rich, a policy analyst for the Reason Foundation (which publishes this blog) notes in the November issue of Reason, previous crackdowns on prescription drugs have actually made the opioid crisis worse.

“It’s clear that the black market has claimed the economy ceded by restrictions on the legal market,” Rich notes, citing Data from the National Survey on Drug Use and Health show that pain reliever abuse rates have been flat since 2002. “When government restricts access to something people want, it drives demand to the black market. In this case, as opioids have become increasingly difficult to obtain legally in the last decade, users have switched to “diverted” prescription medications and illicit alternatives, including heroin. And just as Prohibition pushed bootleggers to switch from beer to potent bathtub gin, traffickers are increasingly adulterating their narcotics with potent synthetic opioids such as sufentanil—a substance that can be up to 500 times stronger than morphine.”

By Eric Boehm/Reason

Posted by The NON-Conformist

Peter Schiff: The Latest Jobs Report Was Anything But Strong

09/29/2018

The Confirmation Files Business, Economy, Education, government, Politics , , Leave a comment

The August jobs report came out last Friday. Mike Maharrey offered a little bit of analysis during the Friday Gold Wrap podcast, saying he was skeptical that the actual employment situation is as great as the mainstream seems to think. Peter Schiff offered a more in-depth breakdown of the employment report in his latest podcast, saying it was “anything but strong.”

The headline number was the 201,000 jobs employers added last month. That came in above expectations, and as Peter noted, people tend to get excited when the number pushes north of 200K.

“For an economy the size of the United States, this is really not a lot of jobs, even if we were creating 200,000 jobs a month.”

Peter said that lost in all the breathless reporting about that August number was the fact that the labor department revised the previous two months downward. It came to a net loss of 50,000 jobs. Analysts took 10,000 jobs away from the July number and 40,000 off the June estimate.

“So, it was a weaker report than probably what everybody was looking for, yet it was spun positive by the media because the current month was better than estimates.”

And when you look at the types of jobs the economy is generating, the picture becomes even less impressive. Not only did the labor department revise down the number of manufacturing jobs created in July, the economy actually lost manufacturing jobs in August, according to the report.

“So, we actually fired people in the month of August from manufacturing. So much for the manufacturing revolution. So much for how the tariffs are working and we’re bringing our jobs back and American manufacturers are bringing back the jobs. Three thousand pink slips sent out in the month of August. So, this is bad news. If you’re trying to hang your hat on the revival of American industry, of American manufacturing, we lost 3,000 jobs.”

Peter also looked at the labor participation rate. It was at 62.9 in July and had been ticking up. People in the Trump administration were even saying, “See, people are coming in off the sidelines.” Well, in the latest report, labor force participation came in at 62.7. The payroll-to-population ratio also dropped from 60.5 to 60.3.

This means fewer people are in the workforce. The unemployment rate held steady at 3.9%, but more people simply dropped out of the labor force.

“So, had people not left the labor force then the unemployment rate might have gone up, because maybe some of the people who left the labor force, well, now they’re no longer looking for jobs because they’re no longer part of the labor force. And so if you’re not in the labor force, you can’t be unemployed even though you’re not working.”

The gain in average hourly earnings got the most attention from the mainstream. It came in at 0.4 – higher than expected. The year-over-year number also came in higher than expected at 2.9%.

“Is a 2.9% year-over-year gain in wages really indicative of a strong economy, or is it indicative of inflation? See, I think it’s the latter. I think it’s inflation that is the reason wages are going up. Remember, wages are prices. They’re the price that you pay to hire labor. So, the price of labor is wages… The price of goods and the price of labor are both affected by inflation. So, because we have all this inflation, prices are rising. They’re rising for goods and they’re rising for labor.”

Peter noted the CPI is currently at 2.9%, exactly the same as the growth in hourly wages. And he said he thinks the real cost of living is rising far faster than 2.9%.

“If all you’ve done with your increased wages is keep pace with higher prices, there’s nothing to brag about.”

Peter went on to talk about how the markets reacted to the jobs report. Of course, it continued to buoy expectations that the Fed will keep pushing forward with interest rate hikes. That made Peter wonder what investors are smoking. You’ll want to listen to the rest of the podcast to get his breakdown of what all of this really means for the markets. One thing he pointed out is that people should be buying gold.

“Gold is an inflation hedge! It’s the absence of inflation that might be bad for gold. As inflation rears its ugly head, that makes gold look prettier and prettier. So, people should be buying gold when the inflation numbers are higher. Now, eventually, they will, once people realize no matter how hot the inflation fire burns, the Fed’s not going to put it out.”

By SchiffGold

Posted by The NON-Conformist

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