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Monday, February 8, 2016

Dot-Com Bubble 2.0 Is Bursting: Tech Stocks Are Already Down Half A Trillion Dollars Since Mid-2015

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Tech Bubble 2.0Do you remember how much stocks went down when the first dot-com bubble burst?  Well, it is happening again, and tech stocks are already down more than half a trillion dollars since the middle of 2015.  On Friday, the tech-heavy Nasdaq dropped to its lowest level in more than 15 months, and it has now fallen more than 16 percent from the peak of the market.  But of course some of the biggest names have fallen much more than that.  Netflix is down 37 percent, Yahoo is down 39 percent, LinkedIn is down 60 percent, and Twitter is down more than 70 percent.  If you go back through my previous articles, you will find that I specifically warned about Twitter again and again.  Irrational financial bubbles like this always burst eventually, and many investors that got in at the very top are now losing extraordinary amounts of money.
On Friday, tech stocks got absolutely slammed as the bursting of dot-com bubble 2.0 accelerated once again.  The following is how CNBC summarized the carnage…
The Nasdaq composite fell 3.25 percent, as Apple and the iShares Nasdaq Biotechnology ETF (IBB) dropped 2.67 percent and 3.19 percent, respectively.
Also weighing on the index were Amazon and Facebook, which closed down 6.36 percent and 5.81 percent, respectively.
LinkedIn shares also tanked 43.63 percent after posting weak guidance on their quarterly results.
Overall, LinkedIn is now down a total of 60 percent from the peak of the market.  But they are far from the only ones that have already seen their bubble burst.
Many of the biggest names in the tech world have gotten mercilessly hammered over the past six months of so.  Just look at some of the famous brands that have already lost between 20 and 40 percent of their market caps…
Yahoo (YHOO) shares are off 39%, and Netflix (NFLX), the best-performing stock in the S&P 500 last year, is now off by 37% from its 52-week high.
Likewise, Priceline.com (PCLN) is off 31% and eBay (EBAY), 22%.
But there are other very big tech companies that have seen stock collapses that completely dwarf those numbers.  Here are some more absolutely stunning statistics from USA Today
Twitter and Groupon are the biggest dogs of this boom, both off 70% from 52-week highs and well below their IPO prices.
FitBit shares have collapsed 70%, while Yelp’s valuation has shrunk by two-thirds.
Box, which has the distinction of posting quarterly net losses in excess of revenue, is down by half.
Match.com, the holding company for dating sites owned by parent Interactive Corp. that went public late last year, is down 39% from its high.
When your stock loses 70 percent of its value, that is a complete and utter collapse.
In the past, I have specifically singled out Twitter, Yelp and LinkedIn as tech stocks that were irrationally priced.
Hopefully people listened to those warnings and got out while the getting was good.
At the top of this article, I mentioned that tech stocks have already fallen in value by more than 500 billion dollars.  The financial crisis that began in the middle of last year is now greatly accelerating, and Wall Street is starting to panic.
As stocks crash, many hedge funds are being absolutely pummeled.  The following are just a few of the high profile names that are experiencing massive losses right now
Some of the biggest names to get trounced include:
►Pershing Square Capital Management, the publicly traded investment vehicle of billionaire hedgie Bill Ackman, fell 11% last month following a 20% decline last year, data from the web site shows.
►Larry Robbins’ Glenview Capital, famous for picking stocks that could benefit from Obamacare, dropped 13.65% in January following a decline of 18% last year, according to data from HSBC’s Hedge Weekly report, a copy of which was obtained by USA TODAY.
►Marcato International, a well-known activist fund run by Ackman protege Mick McGuire, fell 12.1% last month following a 9% loss last year, according to HSBC.
When you lose more than 10 percent of your money in a single month, that is not good.
And of course I am far from the only one warning that big problems are on the horizon.  In fact, analysts at Citigroup just made international headlines by warning that the global economy was now trapped in a “death spiral”
Some analysts — including those at Citi — have turned bearish on the world economy this year, following an equity rout in January and weaker economic data out of China and the U.S.
The world appears to be trapped in a circular reference death spiral,” Citi strategists led by Jonathan Stubbs said in a report on Thursday.
Stronger U.S. dollar, weaker oil/commodity prices, weaker world trade/petrodollar liquidity, weaker EM (and global growth)… and repeat. Ad infinitum, this would lead to Oilmageddon, a ‘significant and synchronized’ global recession and a proper modern-day equity bear market.”
Signs of a significant economic downturn are all around us, and so many of the exact same patterns that played out during the last two stock market crashes are happening again, and yet most people continue to refuse to acknowledge what is taking place.
If you are waiting for this new dot-com bubble to crash, you can stop waiting, because it has already happened.
When your stock falls by 50, 60 or 70 percent, the game is already over.
But just like 2001 and 2008, many people out there will end up being paralyzed by indecision.  Once again the mainstream media is insisting that there is no reason for panic and that everything will be just fine, and once again millions upon millions of ordinary Americans will be wiped out as the financial markets implode.
This is now the third time this has happened since the turn of the century.
How clueless have we become?  The exact same thing keeps happening to us over and over and yet we still don’t get it.
Only this time around there isn’t going to be any sort of a “recovery” afterwards.
This is essentially our “third strike”, and the years ahead are going to be extremely bitter and painful for most people.
But if you want to believe that one of these politicians is going to come along and save America, you go ahead and keep on believing that.
Most people believe what they want to believe, and the capacity that many Americans have demonstrated for self-delusion is absolutely remarkable.

Credit to Economic Collapse


Russia will shoot down Turkish jets in Syria, Deputy Defense Minister says


Image result for Russia jets in Syria


Deputy Defense Minister Anatoly Antonov said that Turkey had refused to confirm its agreement with the memorandum of flight safety in Syria and blocked a telephone hot line prior to the attack on the Russian Su-24.

Speaking about the possible use of Turkish aviation in Syria, Antonov said that the Russian air defense group in Syria makes it possible to use appropriate measures to ensure the safety of flights of Russian aircraft.

“Our air defense group allows to early detect a threat to Russian aircraft on combat missions in Syria and, if necessary, take adequate measures to ensure the security of their flights,” RIA Novosti quoted Antonov as saying.

He also added that Turkey should fully adhere to the provisions of the Russian-US memorandum of flight safety in the Syrian Arab Republic, should Turkey use its aviation in Syria.

Credit to Eutimes.net

American Girl Helps Homeless Muslim “Refugee”- He Follows Her Home And Rapes And Strangles Her To Death



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Lauren Mann was an American music and arts student who loved playing the piano and went to Austria specifically to focus on her music studies while working as an au pair All her friends say that she had a generous heart for the poor and needy. Being 23 years old and living amidst this “refugee” crisis, out of the goodness of her heart she wanted to help these “migrants,” many of whom were homeless and living near her. She would go out and give them food, drink, and little treats such as cigarettes.
One of the people she helped was a Gambian Muslim named Abdou. According to the reports, she had given him help on more than one occasion. In thanks for her kindness, he followed her home one evening broke into her apartment, and strangled her to death as he raped. The abuse was so horrible that her mangled corpse was left covered in her own blood and vomit on her bed.
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Her apartment in Vienna where her body was found
To make things worse, it has come out that after police arrested him, they realize they already knew him. He was on the run from police for raping an underage girl- which was why he was homeless From the Kroner and the UK Daily Mail:
An illegal immigrant has been arrested over the murder of an American nanny who had given him shelter at her Vienna apartment.
The 24-year-old Gambian had been wanted by police since the death of Lauren Mann, 25, from Grand Junction, Colorado last month.
He was arrested on Thursday in Bern, Switzerland, at an asylum center there after his mobile phone use was traced.
Lauren lay dead on her bed on her belly, half-naked, enveloped in a sweater with her face pressed against the mattress, her upper body naked and her pants pulled down to the waist. Her blood was mixed with vomit.
Credit to Shoebat.com


NASA UNSURE HOW CLOSE MASSIVE ASTEROID WILL FLY-BY NEXT MONTH

The Psychological Reasons Why Americans Will Embrace Their Coming Enslavement

do something

The Common Sense Show is bring forth a story of unbelievable implications to the people of the United States. Originally, the story was to be released today. However, when I released Part One, Facebook moved to suspend my account. Both of my computers have crashed within a 12 hour period, and my phone communications have been been seriously impaired.
This morning, I had an “aha” moment of insight. Even though the documentation for the validity of this story is s good is relatively good, many will not believe it because of the shocking implications of the content and even fewer will believe it because of the conditioned state of passivity that the American people find themselves in. This story addresses this point. God-willing and if I have any access to working computers left, I will publish, tomorrow, one of the biggest stories ever published by The Common Sense Show.



Three Psychological Reasons Why Americans Are Politically Paralyzed

There is a set of psychological reasons why our people, even those that are seemingly more awake than most, would accept this latest tyranny from their government. We know about cognitive dissonance which prevents people from seeing the totality of a threat and thus inhibiting their personal ability to make the paradigm shift needed to accurately perceive the threat. We also know about bystander apathy which stands as an obstacle to getting involved because in this large country, “someone else will do it”. And there is a third psychological reason which prevents us from getting involved because we have been conditioned that our actions cannot make any difference which is reflective of a condition called, learned helplessness.

The Brainwashing of America

Americans have been brainwashed into believing that their government will care for them in their time of need. Has this time in American history been foretold? I believe that it has and that H. G. Wells was the prophetic messenger of the New World Order.
Wells actually understood a concept that modern day psychologists refer to as learned helplessness and he wrote about it in his book, The Time Machine, which was originally published in 1895 and the book was later made into a 1960 hit movie by the same name. The book prophetically told of a time in the distant future where the “normal” inhabitants of the earth would be docile, passive and suffer from the condition that modern day psychologists refer to as “learned helplessness.” What is learned helplessness?

Learned Helplessness

Why won’t America stand up for herself? Why is the country, once a country which possessed courage and conviction, now sitting idly while allowing itself to be taken to the slaughter without so much as a whimper?
The answer to the above question lies in the psychological concept known as “Learned Helplessness” as discovered by Martin Seligman in the 1960’s.
“Learned helplessness” occurs when an animal, or a person, is repeatedly subjected to an aversive stimulus that it cannot escape from. Eventually, the animal will stop trying to avoid the stimulus and behave as if it is utterly helpless to change the situation. Even when opportunities to escape are presented, this learned helplessness will prevent any action”.

seligman 2

Phase One
In the first phase of the learned helplessness experiment, Seligman placed a dog on an electrical grid, shocked the dog and noted that the dog would demonstrate the ability to escape the aversive stimulus.
Phase Two
In the second phase, the dog was barricaded on the grid and was unable to escape the painful shocks. Eventually the dog laid down and passively accepted the shock.
Phase Three
Seligman then removed the barricades and the dog could have easily escaped the shocks. However, the dog, conditioned by the prior set of events, simply laid down and accepted the shocks, without mounting any resistance whatsoever. This, in large part, is where America is at today.

HG Wells Was One of “Them”

HG Wells, an avowed globalist.
HG Wells, an avowed globalist.
Wells was an avowed globalist and Eugenicist, and he portrayed the experiences of a time-traveler in the year 802701 A.D.  HG Well’s work demonstrated the complete and present day suicidal compliance of the concept of learned helplessness in which the brainwashed people were portrayed in first, the novel and later in the movie starring Rod Taylor, as George, and Yvette Mimieux, as Weena.
The 1960 movie, The Time Machine.
The 1960 movie, The Time Machine.
When George arrived, in his time machine, to the distant future he found an extremely passive race, almost appearing to have been lobotomized, known as the Eloi. On the surface, this passive race lived a blissful life along an idyllic riverbank eating fruits and berries and engaged in meaningless conversation. Every need was “magically” provided for the Eloi by unseen benefactors. Upon his arrival, George thought the Eloi lived an enchanted life, but how they maintained their lifestyle remained a mystery. George took note that hard work and struggle had been replaced by a lifestyle which contained no cares, no anxieties, no responsibilities and this race of people were devoid of any ambition as it appeared to have been bred out them. Today, the Eloi would all own an Obamaphone.
obama phone 3
In an early scene in the movie, Weena, was being swept away by a swift river current and not one of the Eloi lifted a finger to rescue her. George rescued Weena. Isn’t that what America is doing today in that most are not expending any energy resisting the tidal wave of tyranny which is threatening to sweep away the members of our country?
George quickly realized that the Eloi had no real culture, no accomplishments and were devoid of any knowledge of their history and mindlessly recreated with no cares, no worries, no responsibilities, and no ambition. In short, this is what America is becoming today.The Eloi all looked alike, they all acted alike and lived happily together in their ignorant and blissful collectivist life-style. This is the third world country that America is quickly becoming in which we stand for nothing, excellence in accomplishment is not often sought after nor honored and our people completely lack any demonstrable sense of courage on a mass scale.
Searching for answers to the question on why the Eloi were happily living in a state of arrested development, George visited the abandoned library of the Eloi and discovered that humanity had bifurcated following a nuclear conflict. The Eloi remained above ground and the physically mutated Morlocks inhabited the underworld but, through stealth, controlled the Eloi. Analogous to Wells’ story, today’s leaders have bifurcated from the public and are literally and figuratively serving the dark side which seeks to destroy humanity.
One afternoon, in the classic movie, the air raid sirens sounded and the Eloi fell into a pre-programmed trance and mindlessly marched toward a pyramid looking bomb shelter, entered, and disappeared as the doors automatically closed. Before George could rescue Weena, she too, was among those who disappeared. When the sirens stopped, the Eloi stopped marching toward the bomb shelter and they returned to normal. George frantically pressed the Eloi survivors, who remained on the outside, as to what had just happened and the only programmed response that he received was that everything was “all clear.”
“All clear”, is the familiar phrase which has been uttered by every population following the cessation of bombing raids. Like the Eloy, America is marching to a silent siren being repetitively played by the media in which we constantly receive the message that we should all mindlessly and unquestionably trust in the government.
The Eloi showed no sorrow and no concern for their fellow citizens who simply disappeared behind the structure and never returned. In the same manner, America shows little remorse for our loss of liberties and financial well-being, which may never return.
Eventually, George was able to gain access to the underground bomb shelter and he discovered that the Morlocks, were cannibalizing the Eloi. As it turned out, the Eloi had been mindlessly programmed to march silently and obediently to their own destruction with absolutely no resistance. The Morlocks, forced to live underground after the nuclear conflict, provided every need for the Eloi in order to fatten them up for the kill, but most of all, they had conditioned the Eloi, in the Pavlovian conditioning tradition, to completely obey. The Eloi were the quintessential example of learned helplessness.
The Morlocks are a symbolic representation of America’s present modern-day Obama administration and symbolizes the global elite who largely hide in the shadows as they attempt to control every facet of our lives. Like the Eloi, Americans are taught by the government that they must be protected for our own good. We not only have to be protected from outside threats, and we also have to be protected from ourselves (i.e., returning veterans, Constitutionalists, Bible believing Christians , etc).
This bomb shelter scene of the movie was indeed very prophetic and very telling, as this precisely represents the globalists reality being carried out in America today in which the government is in the process of  taking care of all of the basic citizen needs as the last vestiges of liberty and the accompanying sense of responsibility is removed. Subsequently, the public’s work ethic and the determined conviction needed to preserve the ideals of freedom are all but gone. This is the baseline definition of learned helplessness.
If you are one of the 50% on the federal handout welfare list, most of you, certainly not all, are contributing to the demise of civilization as know it. The government is the new God, it is trying to become the purveyor of truth and the source of all wants and needs. What the American sheeple do not realize is that by allowing the government to provide the basic needs for so many of our people is a kind of an appetizer, while, we the people, are the main course. This is why the Internet, as we know it, will soon be gone because you cannot be allowed to know the truth!
America has been conquered by the five megabanks and most of us are totally unaware that we have been subjugated and are in the process of being domesticated by organizations such as the TSA and their invasive policies which teach Americans that your body does not belong to you, it belongs to the government. Yet, Americans cannot attend a public event in which we are not constantly reminded how free we are because of the sacrifice of our troops (which are now under the control of NATO and the United Nations as they serve the corporations). As far as the Eloi knew, they were also living under the illusion that they were free. The Eloi, the same as Americans, had been conditioned to mindlessly obey authority even when it would lead to their destruction.
In the Well’s novel, the main character, George, had not been a product of this conditioning and descended into the Morlock’s lair and defeated the Morlocks. Through his courage and determination, George showed the dumbed-down Eloi how to defend themselves against certain death and how to actually fight for freedom. Surprisingly, the Morlocks were relatively easy to defeat when they were forcefully opposed.
H. G. Wells was an avowed globalist. He was the lover of Margaret Sanger, the founder of the baby murder factory we call Planned Parenthood. In the book, Wells clearly laid out his vision for the domination of humanity by shadowy underground groups and individuals. Unfortunately for humanity, there is no George who is going to show in the near term and defeat the Morlock (i.e. globalists).

Learned Helplessness In America

Today, we lay down in the face of the abject criminality of our government. We accept GMO’s, chemtrails, CPS sponsored child sex trafficking, the theft of our mortgages, the murder of dissidents, constant surveillance, unsafe medicines and foods, and the privatization of our most vital resources which are being priced out of our reach (e.g. water) and now we are soon going to be experiencing the loss of the truth in the form of the free Internet.
We have the ability to fight back (phase one). We have done it before (e.g. Revolutionary War, Civil War). However, this was before the omnipresent MSM came on the scene.
We are conditioned by an apathetic Congress that our opinion does not matter (phase two). The media tells us we are the most free nation on the earth.  As a case in point, we honor our veterans and subsequently let the VA murder them. We are conditioned by these factors and the corporate controlled media that our actions can make no difference.

Conclusion

We sit primed today to accept everything our government does to us on behalf of their corporate controllers (phase three). The end result of our passivity is depopulation. Tomorrow I will print Part Two. And I predict that 20% of the readers will be very alarmed. The other 80% will be too busy efrom their Super Bowl hangovers.
Credit to Common Sense

"Global Citizens" The New World Order Is Rising

The American Dream Is Dead, And Now Even The Mainstream Media Is Starting To Admit It




Cemetary Graveyard - Public DomainAre you living “the American Dream”?  If so, you should consider yourself to be very fortunate, because most Americans are not.  In fact, as you will see below, a new survey has found that there is nowhere on the entire planet where the average wage earner is making enough money to live “the American Dream”.  Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now the middle class makes up a minority of the population, 51 percent of all American workers make less than $30,000 a year, and poverty is growing rapidly.  The American Dream is essentially dead, and even the mainstream media is starting to figure this out.
Just today, someone sent me a U.S. News & World Report article entitled “Even Americans Can’t Afford the American Dream”. The following is an excerpt from that article
The study goes country by country, factoring in average local wages and prices to calculate the regional costs of luxuries such as midsize homes (by U.S. standards, 1,480 square feet); electricity and high-speed Internet; cars and enough money for gasoline; food for a family of four; and enough disposable income to periodically dine out and attend movies or other events.
Researchers ultimately found there isn’t a country on the map whose average wage earner could afford all of these expenses together. What’s more, average consumers in Saudi Arabia and Oman are actually closer to financing these socioeconomic goals than the average American. The average Saudi household would only need to see monthly salaries climb by about $74 to realize the American dream in their own country, while U.S. workers would need hundreds of dollars in additional income.
Isn’t that alarming?
The American Dream is out of the grasp of most people living in America, and there isn’t anywhere else on the globe where a majority of the workers are experiencing it either.
That same article also contained a few other facts that are truly sobering…
“After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number by those in the economic tiers above and below it,” the Pew report said. “Since 1971, each decade has ended with a smaller share of adults living in middle-income households than at the beginning of the decade, and no single decade stands out as having triggered or hastened the decline in the middle.”
Another recent study from the Brookings Institution found that median wages fell in 80 percent of America’s largest metros between 2009 and 2014.
The middle class has been shrinking for a very long time, and now that collapse is accelerating.
So what is the solution?
Well, CNN is reporting that a new survey has discovered that middle class Americans feel that the federal government should do more to help them out…
Hey federal government! The middle class would like some help, too.
A majority of Americans say the feds don’t do enough to help the middle class, according to a Pew Research Center survey released Thursday. The middle class is more neglected than the poor or children, survey respondents said.
More socialism for everyone!
That will solve all of our problems, right?
Of course not.  Actually, if we had a much smaller government that would probably go a long way toward fixing things.  This is hard to believe, but in 2015 Americans spent more on taxes than on food, clothing and housing combined.
If the federal government would just stop taxing us into oblivion, a lot more of us would do okay all on our own.
These days, so many families are just scraping by from month to month.  As the cost of living continues to move steadily upward, many Americans find themselves forced to go into debt just to cover basic expenses.
And our society actually encourages all of us to go into debt, and so we think that it is okay.  But many of us end up digging financial holes that we never get out of.  This is especially true for a lot of young people today.  One recent survey found that 68 percent of all Americans had destroyed their credit before the age of 30.
Of course then we hear on the news that the economy is “not growing fast enough” because consumers are not spending enough money.
The experts that are telling people this don’t seem to understand that most consumers are tapped out at this point.
You can’t get blood from a rock, and as a result a lot of retailers are really hurting right now.  The following list of store closures comes from my recent article about the ongoing retail apocalypse
-Wal-Mart is closing 269 stores, including 154 inside the United States.
-K-Mart is closing down more than two dozen stores over the next several months.
-J.C. Penney will be permanently shutting down 47 more stores after closing a total of 40 stores in 2015.
-Macy’s has decided that it needs to shutter 36 stores and lay off approximately 2,500 employees.
-The Gap is in the process of closing 175 stores in North America.
-Aeropostale is in the process of closing 84 stores all across America.
-Finish Line has announced that 150 stores will be shutting down over the next few years.
-Sears has shut down about 600 stores over the past year or so, but sales at the stores that remain open continue to fall precipitously.
When I was a young boy, I think that you could have said that the American Dream was still alive and well in the United States.
But after decades of exceedingly foolish decisions, things have completely changed and the middle class is dying right in front of our eyes.
If you doubt this, please see the list of statistics that I have shared below that comes from one of my previous articles
#1 This week we learned that for the first time ever recorded, middle class Americans make up a minority of the population. But back in 1971, 61 percent of all Americans lived in middle class households.
#2 According to the Pew Research Center, the median income of middle class households declined by 4 percent from 2000 to 2014.
#3 The Pew Research Center has also found that median wealth for middle class households dropped by an astounding 28 percent between 2001 and 2013.
#4 In 1970, the middle class took home approximately 62 percent of all income. Today, that number has plummeted to just 43 percent.
#5 There are still 900,000 fewer middle class jobs in America than there were when the last recession began, but our population has gotten significantly larger since that time.
#6 According to the Social Security Administration, 51 percent of all American workers make less than $30,000 a year.
#7 For the poorest 20 percent of all Americans, median household wealth declined from negative 905 dollars in 2000 to negative 6,029 dollars in 2011.
#8 A recent nationwide survey discovered that 48 percent of all U.S. adults under the age of 30 believe that “the American Dream is dead”.
#9 At this point, the U.S. only ranks 19th in the world when it comes to median wealth per adult.
#10 Traditionally, entrepreneurship has been one of the engines that has fueled the growth of the middle class in the United States, but today the level of entrepreneurship in this country is sitting at an all-time low.
#11 If you can believe it, the 20 wealthiest people in this country now have more money than the poorest 152 million Americans combined.
#12 The top 0.1 percent of all American families have about as much wealth as the bottom 90 percent of all American families combined.
#13 If you have no debt and you also have ten dollars in your pocket, that gives you a greater net worth than about 25 percent of all Americans.
#14 The number of Americans that are living in concentrated areas of high poverty has doubled since the year 2000.
#15 An astounding 48.8 percent of all 25-year-old Americans still live at home with their parents.
#16 According to the U.S. Census Bureau, 49 percent of all Americans now live in a home that receives money from the government each month, and nearly 47 million Americans are living in poverty right now.
#17 In 2007, about one out of every eight children in America was on food stamps. Today, that number is one out of every five.
#18 According to Kathryn J. Edin and H. Luke Shaefer, the authors of a new book entitled “$2.00 a Day: Living on Almost Nothing in America“, there are 1.5 million “ultrapoor” households in the United States that live on less than two dollars a day. That number has doubled since 1996.
#19 46 million Americans use food banks each year, and lines start forming at some U.S. food banks as early as 6:30 in the morning because people want to get something before the food supplies run out.
#20 The number of homeless children in the U.S. has increased by 60 percent over the past six years.
#21 According to Poverty USA, 1.6 million American children slept in a homeless shelter or some other form of emergency housing last year.
#22 The median net worth of families in the United States was $137, 955 in 2007. Today, it is just $82,756.

Credit to End of the American Dream


Chinese Reserves Plunge By $100BN - What Does It Mean For Markets?


Image result for Chinese Reserves Plunge

As we previewed on Thursday, the biggest event of the week, and perhaps of the month, was not Friday's nonfarm payroll report, but the January update of China's FX reserves, which the PBOC released last night. The number came out at $3.2309 trillion, down $99.5 billion from the prior month, and $8 billion less than the December outflow of $107.6 billion.

And even as China added $3.4 billion to its gold reserves, which rose to $63.6 billion or an increase of half a million ounces to 56.66 million, this reduced the total amount of Chinese foreign reserves to the lowest level since May 2012, and down from the $4 trillion peak in the summer of 2014 when the US Dollar started its rapid appreciation on rate hike concerns, and led to nearly a trillion dollars in Chinese capital outflows.  

Recently, an important question that has emerged is for how much longer can China sustain its FX intervention before tapping out and letting the hedge funds win with their short Yuan bets once total reserves drop below the critical redline of approximately $2.7 trillion as calculated by the IMF - the answer is between 5 months and 10 months assuming monthly reserve burn rates of $130BN to $60BN. 
That, however, is a bridge we will cross some time in the summer of 2016. 
For now  the real question is what does the January Chinese FX outflow mean for risk come Monday's open, and how will it affect markets when they start opening tonight, if not in China which is closed for the week for its new year celebrations.
Recall that in our Thursday preview we warned that according to one of the more prominent bears from BofA, Michael Hartnett, had the reserve outflow come in well below expected, it would unleash a "vicious bear market rally."
This is what we said:
According to consensus estimates, China will report that its total FX reserves declined to $3.2125 trillion from $3.33 trillion: a drop of $118 billion, or modestly higher than the massive December $108 billion outflow.

In other words, a reported number below, and certainly substantially below, $118 billion for the January outflow and it would be off to the races as a massive short squeeze will grip all the commodity and materials-linked sectors. 
That said, keep in mind that BofA itself had a far more optimistic forecast than consensus: 
"We forecast China FX reserve changes and estimate a USD37.5bn fall in January – (USD29.1bn decline adjusting for a negative FX valuation effect). Note that the standard error of the forecast is large at USD24.5bn, which would give us a downside of USD84.5bn fall. We caution that this is guidance and we attempt to be as transparent as possible so investors can gauge the odds in what is a key release for the markets. Note too this is based on onshore CNY FX volumes and our estimate maybe biased down as there are no real time volumes for offshore CNH.

And then there was Goldman, because just as a far smaller than expected number would be very bullish, so a far greater outflow would be bearish. According to estimates by Goldman Sachs, not only did outflows not slow down as dramatically as BofA believes, but they in fact soared to an all time high $185 billion in January. 
This is what Goldman said: "There has been around $USD 185bn of intervention (with the recent intervention predominantly taking place in the onshore market)" split roughly $143 billion on the domestic side and $42 billion on the offshore Yuan side." In the last few days, Goldman actually bumped up this forecast to $197 billion to account for valuation adjustments. 



This is how we concluded: 
So there is your bogey, one which will set the mood for risk over the next month: this weekend, China will announce its January reserve outflows which are expected to decline by about $120 billion. Should the number be far less (ostensibly closer to BofA' estimate of $37.5 billion) expect a whopper of a bear market rally coupled with a huge short squeeze. If Goldman is right, however, with its record ~$200 billion in FX intervention and implied outflows, then all bets are off.
The actual number (whether it is fabricated or not, and since this is China, all bets are on the former) came in at $100 billion, modestly below the consensus estimate of $120 billion, well below the Goldman worst case scenario of $197 billion, and well above the BofA "best case" of 37.5 billion.
Or smack in the middle of a Goldilocksian no man's land.
What does it mean for markets? Ironically, this may have been the most unfavorable outcome, because had China admitted the true severity of its outflows, there would have been a downward flush in asset prices, after which the market could focus more on fundamentals and rise from there with the Chinese capital outflow threat no longer dangling overhead; alternatively, a shockingly small number would have crushed the shorts only to let them re-establish bearish positions after the initial spike higher.
As it stands now, however, what is really happening with the biggest risk factor to commodity, credit and capital markets, remains a mystery, and instead of getting some much needed clarity from China's January reserve number, the world's traders and investors will now have to wait for the February reserve update one month from now to learn if China has managed to slay its capital outflow demons, or if these were just getting started. 
For markets, what this means is that the next month will likely be market by more of the same sharp, illiquid volatility that has characterized 2016 so far.
Credit to Zero Hedge