Kyle Bass of Hayman Capital Management explains…

From CNBC:

The nation’s unemployment rate as measured by the Labor Department vastly underrepresents the number of Americans actually out of work, hedge fund manager Kyle Bass told CNBC Wednesday.

Earlier this month, the government said the nation’s unemployment rate fell to 6.1 percent in August, while job growth cooled with just 142,000 nonfarm payrolls added.

“Look at unemployment, the way it’s calculated is it’s semi-rigged,” he argued in a “Squawk Box” interview. “It will trend down to the 5 percent range just because people stop looking for a job.”

“If you take everyone that has dropped out of the workforce since the beginning of the financial crisis,” he continued, “the unemployment number would be 11 percent.”

Finish the article here: http://www.cnbc.com/id/102029011

It’s nice to see such an important but overlooked issue in modern banking get mainstream attention, however small.

From Business Insider:

The last time I taught college-level money and banking, over five years ago, the textbook I was coerced into assigning (but didn’t use) still had a section on the mechanics of how the banking system in a fractional-reserve regime could expand deposits (a component of “money”) by some multiple of cash reserves provided by the central bank. The Federal Reserve Bank of Chicago, one of my former employers, had published a booklet, “Modern Money Mechanics,” that explained how this process played out.

When I was at the Chicago Fed, this was one of the Bank’s “bestsellers.” In my undergraduate money and banking class, there were several questions on the final exam that pertained to the mechanics of this seemingly “magical” deposit-expansion process. I would be willing to wager that to this day, there still are questions on most money and banking final exams related to the mechanical process of deposit expansion in the banking system.

It is a money and banking class rite of passage. Although the money multiplier is a convenient pedagogical tool, I suspect that the underlying economic significance of it is neglected in most classrooms. And that underlying economic significance is that the banking system in a fractional-reserve regime can, along with the central bank, create credit figuratively out of thin air.

Read the rest here: http://www.businessinsider.com/consequences-of-thin-air-credit-2014-9

I, iPhone

Nearly every region in the world is involved in its production

Environmentalists should rejoice at the news.

From AP:

PITTSBURGH (AP) — The final report from a landmark federal study on hydraulic fracturing, or fracking, found no evidence that chemicals or brine water from the gas drilling process moved upward to contaminate drinking water at a site in western Pennsylvania.

The Department of Energy report, released Monday, was the first time an energy company allowed independent monitoring of a drilling site during the fracking process and for 18 months afterward. After those months of monitoring, researchers found that the chemical-laced fluids used to free gas stayed about 5,000 feet below drinking water supplies.

Scientists used tracer fluids, seismic monitoring, and other tests to look for problems, and created the most detailed public report to date about how fracking affects adjacent rock structures.

The fracking process uses millions of gallons of high-pressure water mixed with sand and chemicals to break apart rocks rich in oil and gas. That has led to a national boom in production, but also concerns about possible groundwater contamination.

But the DOE report is far from the last word on the subject. The Energy Department monitored six wells at one site, but oil or gas drilling at other locations around the nation could show different results because of variations in geology or drilling practices. Environmentalists and regulators have also documented numerous cases where surface spills of chemicals or wastewater damaged drinking water supplies.

The DOE study also ran into problems with the man-made markers meant to track possible long-term pollution. DOE said it was able to track the markers for two months after fracking, but then that method had to be abandoned when it stopped working properly.

A separate study published this week by different researchers examined drilling sites in Pennsylvania and Texas using other methods. It found that faulty well construction can cause pollution, but not fracking itself.

Avner Vengosh, a Duke University scientist involved with that study, just published in The Proceedings of the National Academy of Sciences, said in an email that it appears the Energy Department report on the Pennsylvania site is consistent with their findings.

The Energy Department report did yield some surprises. It found that the fractures created to free oil or gas can extend up to 1,900 feet from the base of the well. That’s much farther than the usual estimates of a few hundred feet. The Energy Department researchers believe that the long fractures may have followed existing fault lines in the Marcellus Shale or other formations above it.

Original article here: http://finance.yahoo.com/news/landmark-fracking-study-finds-no-160237470.html

Greedy capitalists continue to hoard their cash as the rest of us suffer. Need more government asap.

From Zerohedge:

What is the biggest risk for investors in China’s e-commerce giant Alibaba? In one word: politics.

Jack Ma Yun, English teacher-turned entrepreneur, is already a legend in China for the incredibly fast growth and remarkable success of the e-commerce firm he founded in 1999. I have no doubt about Ma’s business experience and leadership skills, but there is one thing Ma – and many of his rivals – may be worried about. Politics.

The Alibaba success story is not just about Alibaba itself. It is about the inevitable trend of globalisation, the rise of China as a country on political and economic fronts, and also about how eager Beijing is to support and build up a crop of new national brands that can compete with the likes of Google and Amazon in the United States.

“To have political connections in Beijing … isn’t necessarily bad. Many companies try to do so”

Beijing’s support – directly or indirectly – is a key factor in Alibaba’s success. Without the government’s support, Ma would not have felt confident enough to speak in New York in front of hundreds of Wall Street investors during the recent roadshow for Alibaba’s initial public offering on the New York Stock Exchange.

Ma understands the importance of the government’s backing for Alibaba and most of the time he has been good at lobbying Beijing for policy support.

However, in at least one case he had a setback and was honest enough to tell the public how he felt about that.

“Sometimes, what can beat you is not technology, but just a document,” said Ma at a technology conference in Beijing in March this year, in response to a question about what challenges Alibaba would face in the next phase of its business expansion.

Read the rest here: http://www.zerohedge.com/news/2014-09-14/biggest-risk-investing-alibaba


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