Tuesday, 05 December 2017 00:02

Is Home Borrowing Back in Style?

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When the "great financial crisis" hit borrowing on home values hard in late 2007, home equity lines of credit organizations plunged just as fast.

In fact, from an all-time high of $120 billion earlier that year, it came all the way down to less than $10 billion per annum during the darkest crisis year, by the end of 2009. Although nowhere near the heydays of the early 2000's, 2017 seems on the way back to near $50 billion by the end of this year.

Consequently, home equity lines of credit and cash-out mortgage refinances are coming back in style as "home availability shortages" are outpacing demand in most parts of the country; a result of increasing employment and rising confidence that an improving U.S. economy is well on the way.

Home equity line originations rose 8% to nearly $46 billion in the second quarter, their highest level since 2008. Simultaneously, borrowing through cash-out mortgage refinancing hit $15 billion, up 6% from a year earlier, according to data from Freddie Mac, the U.S. supported financial entity.

The primary thrust behind this skyrocketing demand are home prices rising to near $300,000 at mid-year, up from $190,000 at the start of previous highs at the start of 2014.

Although increasing concerns are emerging regarding similar factors existent prior to the "great financial crisis," there is no housing bubble emerging at this time. This is especially true since the nation's financial institutions have never been under the strict controls existing today.

In fact, the nation's leading banks are encouraging prospective borrowers to invest in residential expansion and improvements, rather than extreme expenditures to add to their purchasing capability. Since a home equity line is similar to credit cards, without limitations, but with the house as collateral, responsible bank management is offering advice to prospective borrowers, even though the recent additional lending is based on the indigenous housing minimal cost justifications.

Even as these loans are becoming increasingly popular due to their as yet limited utilization vis-a-vis their credit capability, the great financial disaster of 2008-12 still serves as a rational restraint of the full borrowing capability of the potential credit requester.

Therefore, U.S. banks' holdings of near $390 billion in revolving home equity as of late summer, are down more than 35% from a peak of about $610 billion in 2009, according to Federal Reserve data. Home equity organization are up appreciably, but still well below pay downs of old lines, according to major banks, who still have a long way to go before reaching new credit pay down balance.

Friday, 01 December 2017 00:07

Why is US Infrastructure Lagging so Badly?

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Shortly after the inauguration of 44th President Barack (in the great financial recession depth,) the U.S. Senate voted a near trillion dollar debt increase to provide this unique national leader with the wherewithal to get the U.S. economy back on its feet.

At that time, it was universally anticipated that this massive bequest would finance a timely infrastructure improvement that had been sadly lagging for more than 55 years, (last updated during the Eisenhower Administration). But to everyone’s surprise, this timely action was ignored by funding the “unpopular” health care revision and the “Al Gore-urged renewables act,” which served the bizarre double purpose of implementing the untried solar, wind, and geodesic power approach to replace the budding shale oil/natural gas production, which was then in its early stages of a successful breakthrough.

Then Chief of Staff Rahm Emmanuel, along with President Obama, totally ignored the urgency of long-delayed “infrastructure” and its major resultant employment-creating benefits, so successfully utilized by President Franklin D. Roosevelt, to stem the depth of the 1930's Depression in its early stages.

While much of the American electorate ignored this “misdirection,” it could have utilized this huge economic financial benefit to have a positive recovery effect on both the resultant 2009-10-11 unemployment; and subsequent “third rate” condition of inferior highways, railroads, bridges, pipelines, and dams, with which the U.S. is shamefully stuck today. It’s a source of embarrassment to personally hear from “world travelers” of the superb infrastructural updates of China, Russia, and much of Southeast Asia now outshining a third-rate U.S. dilapidated infrastructure.

While the first African/American President was rightfully a source of pride to most Americans upon his election, it has resulted in an outcry against Obama’s key initiatives, which are hanging over a lagging America today.

Even today, it’s puzzling that the Trump Administration is putting no sense of urgency on the more than 55,000 crumbling bridges, a third-rate highway system, and an overall national “indifference.” This is still held back by eight years of President Obama’s executive directives, and a seemingly two-term indifference by President George W. Bush.

While President Donald J. Trump seems pre-occupied with healthcare revision, a long-delayed up-to-date tax structure, and disentangling from the “Paris Climate Treaty,” NAFTA, and the give-away Trans-Pacific Asian sellout, “infrastructure” seems to be still wallowing on the bottom of the Trump to-do list. This is especially true since there appears to be an overall lack of understanding by Americans of the urgent infrastructure requirements, in the declining list of importance, by both Congressional leadership, and any popular pressure. This upgrading of the world’s richest nation seems to be at the bottom of urgency of making “America great again,.” This applies to employment, as well as the nation’s restructuring.

Thursday, 30 November 2017 00:05

Why are US Energy Exports Substantially Surging?

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When President Barack Obama lifted the 1975 U.S. export oil embargo, to gain the GOP votes needed to pass the Fiscal 2017annual budget in early October 2016, he did this despite his desire to further curb an already fading oil production, in favor of renewables. This served as an exchange for the needed annual “US expenditures,” mandated by law.

It also opened the door to a dramatic oil and natural gas rebound, which the outgoing President felt would be negated by an expected Hillary Clinton presidency only a month later.

Despite oil prices having continued to be stuck near $50 a barrel, one-half the WTI price before the “great financial recession” (2008-12); and with drilling rig costs and associated variegated supplies greatly decreased, these 50% cuts in West Texas Intermediate (WTI) prices have opened the door to already substantial oil exports. These amount to 1.2 million barrels per day; and a surge of liquid natural gas, primarily to Southeast Asia, but increasingly lately to Europe, which have provided a meaningful upward surge to U.S. exports overall.

While both world-leading 10-million barrels per day by Saudi Arabia and Russia have been unsuccessful in getting prices up due to U.S. vastly increased “shale production,” they have kept world prices from rising. U.S. shipments are spreading to other parts of the world, putting an even greater lid on competitive oil-and-natural gas pricing. This could signal greater price-cutting in the future, since world-wide demand, in the near future, will not match the heavily increased fossil fuels now reaching the world markets.

With the U.S. gasoline demand hanging in at around 20-million gallons per day, less than half is provided by primarily light Texas-based domestic production. The other half has been provided by Saudi Arabia and Venezuela imports. This is due to foreign-owned U.S. refineries, that have, for many years, been controlled by the Saudis and Venezuelans.

However, it is expected that this will be partially off-set by a dramatic reduction in Venezuelan activity, due to the latter’s serious internal economic crackup, putting U.S. refineries back into play most recently. When projecting into 2018 and beyond, the totality of America’s oil/natural gas production is expected to reach a 50% increase as the calendar flips over to the 2020's. Such developments are considered a near certainty.

A “Hillary” presidency would likely have increased the 10% proportion of “ethanol” to each gallon of gasoline, plus the shutting down of the remaining U.S. coal mines, despite its need for thermal coal to develop iron ore into steel. However, the Trump presidency is totally committed to the “coal mines” rebound in West Virginia, Virginia, Kentucky, Eastern Ohio, and Eastern Pennsylvania. Only Democrat New York has put a lid on coal mining, in a state that is dramatically opposed to all initiatives stemming from the conservative Trump Administration’s economic growth initiatives.

The changes that will be occurring early in 2018, impacting the return of U.S. based production and manufacturing activity, could assure Trump a major political plus prior to the early November, 2018, mid-term Senatorial and Congressional elections.

When President Trump upset Hillary Clinton in the presidential sweepstakes more than a year ago, thousands of the nation’s “business owners” breathed a heavy sigh of relief.

Since this century’s beginning, these “independents” had seen an increasingly antagonistic trend, backed by the White House, that was making “independents” suspicious about the intentions of the federal government’s attitude toward private business in general.

Despite relatively low interest rates that have persisted since the end of the “great financial recession” (2008-2012), the high-handed attitude of the Environmental Protection Agency and the “Dodd-Frank” regulations in particular, faced tens of thousands of “family-owned” businesses with increasing concern, regarding government’s long term attitude toward their very existence.

This became ever more apparent during the two terms of President Barack Obama’s legislative and executive order approach. These tended to favor such legislations as ever higher minimum wages, shorter work weeks, and support of conglomerates’ relocation of divisions and subdivisions to offshore locations that provided lower costs. These covered a great variety of products and favored the consumption sector, while facing U.S.-based privately-owned businesses with increasingly higher production and distribution costs. Such legislative animosity appeared to make the existence and growing expansion of “small businesses” increasingly difficult.

Such concern was further heightened by lower import tariffs and “paperwork costs,” that made the functioning of these “family-owned” businesses more costly to manage. It became increasingly apparent that this overall U.S. Government attitude was primarily geared toward the benefits of cheaper public consumption, to the detriment of factories, distribution segments, and employment costs, which are increasingly more burdensome for the independents.

While greeting with obvious relief the surprise election of incoming President Donald J. Trump, the increasing concern with the inability of the 45th President to implement needed legislation (taxes, import tariffs, and infrastructure expansion) has posed grave concern to many “independents,” of which we are personally aware.

The original optimism that greeted an obvious friend of “independents” originally has turned into skepticism by many thousands of private businesses. These were hoping for a surge of friendly legislation to reverse the 68% gross domestic product percentage of consumption growth, the highest in modern U.S. economic history.

Only a reversal to a more normal dependence on American-based production companies will change this growing pessimism. But President Trump’s capability of making this happen, so far, generates greater concern as time goes by.

It seems almost ludicrous to see the obscure, landlocked nation of Afghanistan as bringing down three of modern history’s most powerful nations— the British Empire, the Soviet Union, and potentially, now, the United States of America.

A study of what eventually did in the first two of these nations reveals the following:

1) When the once world-leading British Empire had become the globe’s mightiest force in the nineteenth century, it had capped its magnificence with the occupation of the Indian sub-continent, including today’s Pakistan and Bangladesh.

The only fly in Britain’s ointment was an unknown unexplored Islamic nation of Afghanistan. To rectify this adversity, the mighty British military forces sent an army of several thousand to quell this seemingly unimportant rebellious country and wipe out its trouble-making.

To the amazement of the indefatigable United Kingdom, only one lone straggler came back alive from this adventure. From then on, the awesome dominance of Britain’s power started on a downward slide, no longer indefatigable by its enemies.

2) In the late 1980's, the Soviet Union’s co-global superpower was at its height of world importance. But at the request of one of its Islamic Republics, Tajikistan, it decided to invade and capture Afghanistan, which had become dominated by the Pakistan-based Taliban rebels. But with the support of “enemy superpower, U.S.A.,” the Soviet forces were decimated by the Afghans, leading to the decision by Soviet President, Gorbachev, to divest all of its non-Russian republics, and the re-establishment of a much smaller Russia, in size and power.

Subsequently, the U.S. became involved with the Afghanistani “curse,” after Osama bin Laden, the progenitor of “9/11," had found refuge there. This led to local U.S.-associated allies taking over Afghanistan from the marauding Taliban, with Americans getting stuck there until now.

This had brought GOP candidate, Donald Trump into the picture, after his pre-election promise to vacate this “black hole,” of major power destruction. At this point, however, the U.S.’s current President has, as yet, benefitted from the lessons of history, which even neighboring Pakistan, home of the Taliban, has chosen to distance itself from. Hopefully, the President will have second thoughts about this swamp, before he and his supporters follow the pitfalls of America’s predecessors.

As if it weren’t enough that President Trump’s ambitious block of initiatives, and the unraveling of his predecessors’ White House indirection, slated to be underway by now, POTUS is currently facing a widening antipathy by the ultra-Liberal sector, as well as his Alt-right enemies.
With the revival of these emotional confrontations accelerating, such antagonism seemed to have been laid to rest with the 1965 passage of the historic Civil Rights amendments for all Americans. But these issues have been reopened, triggered by a Left Wing attempt to eradicate the “landmark” statues that continue to exist throughout most Southern cities.

While these long ago reminders that the “1860-1865" schism impacted all Americans, a growing number of critics have emphasized the belief that Confederate leaders, such as Generals Robert E. Lee, Jeb Stuart, and Stonewall Jackson were an anathema to American history, despite its subsequent reunification. These “non-believers” are certain that their eradication is needed, to emphasize the Civil War’s criminality.

From the standpoint of President Trump’s overloaded economic rectification issues, this couldn’t have come at a worse time, to move his economic resolutions forward. But the President himself hasn’t calmed these outbursts, by emphasizing that such “rebels” were an integral part of American history. This has only made implementation of his platform more difficult, due to the emotional widening of opposite beliefs.

Trump's urgent initiatives include long overdue “healthcare” rectification, the long-overdue taxation updating, and a desperate need for modernizing infrastructure development, in addition to a new foreign policy direction.

Piled on top of questionable support by members of the President’s GOP Senate, and a truculent Democrat and House counterpart, these ongoing radical left-right confrontations are only making matters worse.

The questionable competence of the current Democrat Party in House and Senate have made the minority party more aggressive, with an almost unanimous negativity toward all initiatives emanating from the White House.

Combined with the constant changes in the President’s Cabinet and advisory personnel, this makes it almost impossible to fulfill his “campaign promises.” This is the opposite of President Reagan’s remarkable six-year, two-party success. Unfortunately, with the increasing lack of support from leading U.S. industry CEO’s, the time of turnaround is running ever shorter toward next year’s mid-term elections, and the inevitable thrust toward a 2020 second-term Presidential election.

Key to President Trump’s upset election victory over Hillary Clinton was the result of a major switch by “blue collar” workers, and the rebirth of “Made in America,” by the many champions of America as a major global manufacturing center.

As the first year of the current Administration nears the end, this hoped-for reversal of slippage into record consumption of gross domestic product (GDP-68%), is showing few signs of reversal as yet. This growing pessimism is a reminder that the dynamic two terms of President Reagan had to overcome the prior two Administrations’ pitfalls, before accomplishing one of the greatest presidencies of the past 50 years. This included incredible success on both economic sectors and foreign policy results. This was the opposite of predecessor Jimmy Carter’s call for America’s “downsizing,” and his failure to confront the growing Soviet Union superpower’s tactics in its expansion into the Mideast, and Latin America.

What is becoming worrisome, regarding the hoped-for success of “Trumpism,” is the President’s growing distraction from working with both sides of the Congressional aisle in the House and Senate. This has been further complicated by a growing faction of his own party, resulting in a distraction from “Trump’s” primary objectives, of economic growth revival.

While a troubling number of domestic antipathies seem to have taken center stage, the previously promised economic industrial rebuilding seems “stuck in the mud” of minor pluses, while the antagonistic U.S. media takes particular pleasure in the current Administration’s lack of “promise fulfillment.”

Although the so-far lack of progress in many of the key issues of America’s future growth is disappointing, further negativity has been shown by leading Fortune 500 CEO’s scuttling President Trump’s manufacturing objectives by liquidating his advisory council’s existence.

While such a state of the Administration’s lack of success is becoming troubling, the total lack of minimal positive initiatives gives President Trump another positive chance in 2018, with the mid-term House and Senate elections beckoning next November.

Unfortunately, the further deterioration among opposing social elements at home, and growing ISIS activity abroad in the Mideast and Europe, further complicates the President’s desire to put the dynamic success stamp on the varied objectives (domestic and foreign policy) that helped him overcome the “official” opinion polls that had expected a certain “Clinton victory.”

Saturday, 25 November 2017 00:45

Will Amazon Undermine U.S. Retail Sector?

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Although America’s “Silicon Valley” technological genius has escalated the U.S., as well as global economic strides, to unexpected forward levels, the “jury is still out” on its impact on the nation’s incomparable retail sector.

While geniuses such as Mark Zuckerberg (Facebook), Steve Jobs (Apple), and Bill Gates (Microsoft) have leapfrogged technical progress to a heretofore unimaginable extent, by and large, this one-generational expansion has been universally acclaimed by modern civilization as a whole. No such understandable “applause” can be awarded to Jeff Bezos, and his incredible reconstruction of America’s multi-million dollar retail sector.

While his Amazon retail revolution may be considered an unassailable gift to America’s 300-plus million retail product utilizers, this has revolutionized the hundreds of thousands of business entities, large and small, that have catered to “neighborhoods” in cities, suburbs, and rural areas throughout the U.S. and increasingly much of the rest of the commercially advanced civilized world.

In effect, although still in its early stages, Amazon is well on its way toward turning shopping centers, large and small, department stores, mail order enterprises, and even specialty stories upside down. Although the major impact of this revolutionary retail technology has already greatly weakened the underpinnings of much of this multi-trillion dollar major segment of the leading U.S. economic sector, it’s only beginning to makes itself felt on retail giants, and neighborhood privately-owned shops. Amazon’s increasing dynamics are running afoul of President Trump’s employment increase and privately-owned independent businesses in all corners of the nation.

Amazon has even invaded the political arena by founder Jeff Bezos’ purchase of the Washington Post, arguably the most pernicious aggressor against President Donald J. Trump’s Administration and all that it stands for. It is safe to say that shopping centers, independent specialty businesses, and mail order companies are all being hit hard by Amazon’s ambitions, which appear to have no limits in their extent of depth and breadth.

While technological expertise has already exceeded heretofore limits, the increased impact on the return of businesses to the U.S. stands to come to a head in the months to come.

For this reason alone, Bezos is sure to become the center of intense confrontation between him and President Trump; but it will also focus on the widening gap between America’s independent businesses and conglomerates, which have been increasing their production centers in low-cost manufacturing areas throughout the world.

While no major outbursts or national confrontations happen by accident, the most recent interaction, rightfully blamed on the combination of the “Alt-Right” alliance of neo-Nazis, KKK, and white supremacist hate mongers is no exception.

Originally instigated by a scattered liberal attempt in Southern states to get rid of the statues of commanding Confederate General Robert E. Lee, Stonewall Jackson, and President Jefferson Davis, this was immediately met by a surge of counter-active demonstrations by neo-Fascist demonstrators upping the ante by “hate demonstrations” in various cities in the South. As normally happens in such trouble-making antagonisms, ultra-liberal elements reacted with equal vigor. This caused destruction, disturbances, and even fatalities as an ultimate counter action.

Although no definitive proof exists, regarding planned trouble-making by either side, the generation of “hate” by all participants seemed to be the ultimate goal. With certain well-known protagonists carrying on where they left off during the recent presidential campaign, it’s obvious that the overall goal of this trepidation was a counter ploy against the tranquility of an awakened American economic and unified U.S. comeback.

While the destruction of the ancient reminders of America’s most heinous civil war have long ago been replaced by a sense of national unification, extremists on both sides of the political spectrum seem dedicated to stirring up internal strife to counteract patriotic tranquility.

This has become ever more apparent, as the President Administration efforts move forward to bring American jobs and factories back to the U.S. , as well as several trillion dollars reposing in foreign nations’ balance sheets. While steps in that direction have as yet been painfully slow, concerned with an “America First” ultimate success, these objectives have a long way to go.

The exposure of unbalanced trade deals, favoring foreign interests, which have been benefitted by a fast-growing U.S. consumption economy, have been stung into action from making re-Americanization happen.

Headway toward this direction’s continuation came to a halt, due to surprising results of the November presidential election. But this has not stopped certain unnamed elements from utilizing America’s media, and stirring up such divisive historical memories as the 1860-65 Civil War.

How this diversity is resolved will be decisive as to whether President Trump’s domestically expanded economy will succeed.

It is nothing short of a national disgrace that the past two presidential Administrations deliberately forced the closures of American factories by greatly decreasing their competitiveness against foreign imports of supposedly comparable effectiveness.

While much of the blame can be charged to mediocre Commerce Secretaries, and the excuse of “climatological purity,” by the Environmental Protection Agency, it can be surmised, if not proven, that this international trade “one-sidedness” was tolerated, if not orchestrated by the successive George W. Bush/Barack Obama Administrations.

The U.S. Labor Information Agency also added to this foreign products advantage by not actively publishing the rising drop in labor force participation rate over the last 16 years. Instead, they overemphasized the lowered unemployment rate of those most recently actively seeking jobs. Banking on the ignorance of the American public, the U.S. Labor Department chose to low-key the all-time numerical high growth of those able to work, but not finding available employment. These have numbered as high as over 90 million since the beginning of this century, but were not included in those considered unemployed.

This deliberate policy of flooding the nation with cheap goods, imported by U.S. conglomerates was uninhibited in importing their consumer products from divisions and subsidiaries produced in foreign nations. This allowed them to lower costs and subsequent prices. This not only went over well with millions of U.S. consumers that benefitted from these price advantages, but also widened the profit margins of U.S. parent companies that could post higher profits in their quarter-annual reports to investors, actual and potential.

No thought was given to the millions of American workers and thousands of U.S.-based factories that suffered from these policies. The fact that the consumption percentage of America’s global leading gross domestic product of goods and services was conveniently downplayed; as was the near $1.5 trillion of these conglomerates’ reserve balances in foreign countries, further facilitated by an internationally high 35% corporate tax, highest in the world.

While the Trump Administration has taken steps in the right direction by focusing on the most egregious export/import imbalance, especially with China, it’ll take a long uphill climb before a reasonable balance is reached. At least the American public, benefitting by the much lower cost of practically tax-free imports of American overseas producers, will wake up to the reality of thousands of lost U.S.-based jobs, which has been making this one-sided policy possible.

Although a policy reversal of tariff balance, resisted by most U.S. conglomerates with foreign subsidiaries and divisions is being considered, it may take years before a partial reversal is set in motion. At least the Trump Administration is on the right track by stripping the free reign of the Environmental Protection Agency, and getting overwhelming support from millions of “blue collar workers.”

Wednesday, 22 November 2017 00:09

Why Is Urbanization Accelerating Worldwide?

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While the world-at-large was primarily agrarian throughout its civilizing history, even up to the more recent Industrial Revolution and its accelerating technology, the shift from a predominantly rustic farm population to greatly expanding cities is evolving with dizzying speed.

According to the United Nation’s population division, as of as late as 2011, statistics indicate that even the least developed nations today are speeding up the rural-to-urban switch with lightning speed. This is especially obvious in the world’s most populous countries, China and India, which comprise more than one-third of the world population of 7.5 billion. With the move to cities being primarily based on a population divergence from agriculture to massive industrial expansion and exports of all types of industrial, commodity, excavation and development jobs, the UN claims there are 32 “urban cyglomerations” that are expanding with ever increasing speed. According to experts attempting to decipher this lightning-like this urban switch, they reveal the sociological, as well as the physical obstacles needed to overcome this massive trend.

Since this phenomenon cannot be slowed down, due to economic opportunities that have been granted to these once predominantly rural nations, primarily Southeast Asian, but even Africa and South America have had to adapt. Those governmental experts attempting to integrate the age-old life-styles of rural living to urbanization, are focusing on the greater expansion of existing metropolises, as well as tackling the many hangups of urban life to which the vast majority of city newcomers are totally unaccustomed.

While the sociological negatives of living in the tight spaces of high rise apartment buildings, now commonly experienced in the intrepid China approach, it has been noticed that the much more highly-paid jobs available to those in China, the most prolific example, coincides with the desire of newcomers to purchase additional space as soon as possible with their additional income.

According to the sprawling growth of some of the world’s most significant “growth cities” is that this concept of much higher paying jobs, than the formerly rural population was used to, has been successfully utilized for the expansion of size and population of these cities themselves.

In the past 20 years alone, such world cities as Cairo, Egypt, Seoul, South Korea, Guadalajara, Mexico, Guangzhou, China, Vinh Long, Vietnam, Pune, India, and Lagos, Nigeria, have seen doubling, tripling, and even more to accommodate the additional metropolitan sprawl that has sprung up in all parts of the world. These have witnessed the greatest and fastest evolution from rural areas to big cities the globe has ever seen.

While such expansion comes with long-term social change, it is the changing nature of these cities, and the huge number of gainfully employed new residents that are only at the early stages of the changing lifestyle with which these new occupants will have to cope.

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