Category Archives: Business/Economics

Business/Economics, International, Opinion

World’s largest oil producer, Russia, halts fuel exports, could drive up gas prices

Russia has stopped exporting refined fuel, officially to deal with fuel shortages in Russia.

Russian officials hope the export ban will last  only through May, but after that Russia will increase to costs of exporting their fuel.  In any event, this move by Russia should add to the increasing fuel prices the world is paying.

I can’t help wonder if Russian leaders are taking advantage of a domestic situation to make things worse for the West, in retaliation for what the West is doing in Libya, and what the West is trying to do in Syria.

 

 

Business/Economics, International, U.S.

Chrysler paying back government loans, borrowing from Peter to pay Paul

Chrysler announced that it will pay back the U.S. and Canadian governments (taxpayers), but not because of increased profits.

Chrysler is trying to get money from private lenders, in order to pay back the government loans.  This is a sign that Chrysler doesn’t think it can pay back the taxpayers, based on its sales/profits.

Also, Chrysler is hoping the private loans will be at lower interest rates, than what it’s paying to the governments.  The interest rate for the U.S. loans are between 7%-14%, and the Canadians up to 20%.  Gee looks like they didn’t get a deal, like most corporations.  Is it because Chrysler is owned by a foreign company?

Business/Economics, U.S.

WalMart brings back guns

WalMart is going to sell guns again.  It realized that part of its declining sales is because it stopped selling guns in about 2,000 stores back in 2006.   Here in Idaho WalMart never stopped selling guns.

The move back to selling guns comes after seven straight quarterly losses for WalMart.

Selling guns is good for the U.S. economy, WalMart officials say most of the guns they sell are made in the U.S.

 

Business/Economics, U.S.

Get ready for price hikes on soap & diapers, Pepsi says profits affected by inflation

Several big corporations who make products from soap to diapers, say they must pass on the higher prices they’ve been paying for raw materials.

“I don’t want to get into shoulda, coulda, woulda; but if you step back, if we didn’t have $1.8 billion in commodity cost increases this year, we would have a fantastic bottom line.”-Jon Moeller, Procter & Gamble

Despite slow sales in the United States, because of the bad economy, the very same corporations complaining of the higher costs they’re paying, are spending money to come up with new products, and of course that’ll be added onto the price you pay at the store.

In the world of soda pop and snacks, Pepsi says their profits are being affected by the increasing price of their ingredients. PepsiCo also owns snack food maker FritoLay, and juice brand Tropicana, as well as other brands.  Even though Pepsi says their profits were affected by inflation, they still did well.  They also said they’ve adjusted their business forecast to take into account “…high global commodity cost inflation, difficult macroeconomic conditions in developed markets and ongoing strategic investments in emerging markets and in brand-building activities.” In other words, price hikes.

 

 

Business/Economics, U.S.

Proof the Federal Reserve works for Corporate America, and Foreign Banks, not you

“Why wasn’t the Fed providing these same sweetheart deals to the American people? The Fed was practicing socialism for the rich, powerful and the connected, while the federal government was promoting rugged individualism to everyone else.”-Warren Gunnels, adviser to Senator Bernie Sanders

The Federal Reserve is a privately run bank.  It operates to make a profit.  It is not interested in helping out the average U.S. taxpayer, because there is no profit in it. It’s only natural that the biggest customers of the Federal Reserve are corporations, like financial institutions and banks, including foreign banks, and governments.

Under court order it was revealed that the Federal Reserve made at least 46 “emergency” loans to the Arab Banking Corporation, and the Libyan government is a 59% stake holder in that bank.

The Federal Reserve has also bailed out two major European banks, as well as many U.S. corporations.  The “Fed” makes its money off the interest it charges for those loans.  That includes the money it “loans” to the United States.  That’s right, our money, the not so almighty dollar, is borrowed from the Federal Reserve.

We little guys are ripped off, because the big low interest lows made to credit card companies, and banks, are used to provide high interest loans to us.  I remember a time when the low interest loans to corporate America were supposed to be passed on to the consumer, in the form of low interest loans.  That’s what former President Ronald Reagan claimed when he argued for a drop in interest rates from the “Fed”.

Since the late 1990s interest rates to corporate America have been going down, while interest rates to us little guys has been going up.  Also notice that interest rates on your savings accounts have been going down as well (and they wonder why American’s don’t save their money in the banks!?).

It’s not just individual consumers that are getting ripped off.  If you’re not a big corporation, just a small business, you’ve been ripped off as well.  There’ve been several regional businesses where I live, that have folded up, not because they didn’t have sales, but because their banks refused to extend credit, or canceled their credit altogether.

Basically the Federal Reserve is now only interested in being able to turn a big profit off their low interest loans.  It can’t do that with small time businesses or individuals.  That’s because they’re operating a WalMart type of business plan, that is making profit off high volume, not high prices.  The only way you can make big profits off high volume, low price, is to have customers that can afford to buy in high volume.

If the Federal Reserve is charging half a percent interest, it needs to make loans in the billions of dollars, in order to make a profit from that half a percent interest.  Logically only big corporations and governments, can take on that big of a loan.

So maybe the Federal Reserve is not “…practicing socialism for the rich, powerful and the connected…” as an adviser to Senator Sanders claims, but is simply acting as any other big corporation would in search of big profits.  After all, the “Fed” is the most powerful corporation in the United States (again it is NOT a government agency).  But this is just more reason why our money should not be controlled by the Federal Reserve.

By the way, know how much the “Fed” made in profits last year?  $81.7 billion.


 


Business/Economics, International, U.S.

I told you, “Watch the Commodities Market”, more bad signs of inflation

The Commodities Market “…is sending us the mother of all price signals. The prices of all important commodities except oil declined for 100 years until 2002, by an average of 70%. From 2002 until now, this entire decline was erased by a bigger price surge than occurred during World War II.”-Jeremy Grantham, GMO LLC

I recently wrote a post that advised people to stop paying attention to stock markets, and start watching commodities markets.  Jeremy Grantham’s research shows why.

According to Grantham, commodities prices (oil, gas, food, clothes, metals, etc) have been going up for the last eight years, big time.  The Federal Reserve has been downplaying inflation, until recently, but Grantham’s research shows inflation has been with us for a while.  He also claims the last eight years has seen the biggest jump in commodities prices since World War 2 (see, wars are not good for the economy, unless you become the world’s arms dealer and can stay out of any actually fighting).

Grantham says the rise of BRICS (Brazil, Russia, India, China and South Africa) has also affected commodities, possibly permanently: “I believe that we are in the midst of one of the giant inflection points in economic history. The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value.”

Grantham explains why everyone should pay attention to commodities, rather than stocks: “…stock prices and they can be, often are, psychologically flakey. But commodities are made and bought by serious professionals for whom today’s price is life and death.”

Grantham says commodities are truly affected by supply and demand, so, with the booming economies of the BRICS, and the ever growing and expanding War on Terror, all of which increase demand for limited supplies, viola, long term inflation!

“We all need to adjust our behavior to this new environment. It would help if we did it quickly.”-Jeremy Grantham, GMO LLC