Question to Millennials: Why Are You Not Mad as Hell Yet?

Millennials, why are you not angry about ...

1. Having to pay Social Security when it won't be there for you.
2. Paying exorbitant taxes for public pension handouts and boomer retirements at age 50 for which you receive negative benefits.
3. Obamacare for which you overpay to support the obese and the nicotine addicts.
4. Enormous student debt burdens for which you received little benefit.

I ask this in response to an email I received from Rich Renza who writes ...

Hello Mish

I'd like to introduce myself as a school teacher and an avid reader of your blog since 2006. I have never left a comment, but I have been reading Global Economic Analysis on a daily basis since I stumbled upon it shortly after selling a condo here in South Florida. Your analysis of the real estate bubble was spot on and aside from your astute analysis, I appreciated how you took complex economic topics and made them much easier to comprehend. Your blog was quickly added to my favorites on my home and school computer and even though I do not have a strong background in economics, it became a daily read.

As a history and mathematics teacher, I took an interest in your coverage of many topics that potentially affected my students. When you wrote about trends that I felt that I could discuss with my (8th grade) students I did. My class has enjoyed spirited discussions on the cost of college tuition, oil prices, the negative impact of the Federal Reserve and the advent of self-driving cars, thanks to your blog.

I took special notice of your blogs regarding issues that Millennials were facing, such as stagnant wages, student loan debt and delayed family formation. Since I began teaching in 2001, I've worked with several thousand students and have witnessed my high school graduates attempt to deal with these challenges. Through the classroom, my impact is limited only to the students that I personally come in contact with.

This motivated me to write an e-book that focuses on Social Security from the perspective of younger Americans. During my research, I often cited your posts on employment, Millennial trends, housing statistics and autonomous vehicles to support my key arguments.

As you know, most Millennials do not believe that they will receive any benefits from Social Security when they retire. Many are confused and disgusted that they are being taxed into a program that will not serve them. My belief is that all Americans deserve the right to choose to opt-out of participation in the Social Security program by discontinuing their payroll tax contributions, if they so desire.

I have created a site and blog, Take Back Your Six Percent to organize young Americans to pressure politicians to allow them the right to opt-out. My e-book, "How Are You Not Angry Yet" is about How Social Security is Destroying the Futures, Finances and Hopes of Generations X, Y and Z and How We Can Put an End To it. It breaks down the complex topic of Social Security in a slightly humorous way that most readers can easily understand.

The bottom line is that your blog, in part, inspired my e-book. Your work motivated me to write even when I worked a second job at night to supplement my teaching income. The amount of effort and detail that you put into each post raised the expectations that I had for my own work. I can honestly say that you inspired me to do better in my life. Thank you for that.

Thank you for your time,

R.J. Renza, Jr.

Renza was recently on a debt Dialogues podcast at the Ayn Rand Institute.

The podcast can be played at Social Security Debt Dialogues.

Mad As Hell

I have not yet read Renza's e-book, so I cannot endorse it. But I can say the notion that millennials overpay and under receive is a valid one.

For years I have been wondering when millennials as a generation will reach this "Not Going to Take It" point.



We will not see change until millennials get mad enough to change conditions.

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Mike "Mish" Shedlock

#1 Reason Stocks are Declining; Is Hillary to Blame for Biotech Smash?

In the wake of yet another big market selloff (biotechs down over 6% today), the Nasdaq 100 index down 2.87%, and the S&P down 2.56%, mainstream media parrots floated numerous reasons behind the selloff.

All of the parrots are wrong.

Lack of Inflation?

Bloomberg interviewed Jeff Korzenik, Fifth Third Bank's chief strategist in its piece What's Really Driving Today's Selloff in U.S. Stocks?.

In the accompanying video, Korzenik blamed the Fed and a "lack of visible inflation".

In the same video segment, Jamie Dimon bragged about the strength of the US economy and the health of the US consumer. As long as a bubble is expanding, things always look good.

Of course the idea that inflation is a benefit to stocks and the economy is preposterous, but that's what puppets have been trained to believe, and say. 

China to Blame?

Reuters writer Noel Randewich says Wall Street Drops as Anxious Investors Eye China.

"U.S. stocks finished sharply lower on Monday and were on track for their worst quarter in four years as investors worried about the health of China's economy and its potential impact on the timing of a U.S. interest rate increase."

Is Hillary to Blame for Biotech Smash?

Reuters writers Ransdell Pierson and Bill Berkrot say Democrats Take Aim at Drug Prices, Prompting Sharp Drops in Biotech Stocks.

Democratic lawmakers on Monday attacked "massive" price increases of two heart drugs from Canada's Valeant Pharmaceuticals International Inc, fueling a rout in drugmaker shares on worries of a government and insurer clampdown on U.S. drug prices.

The Democratic House members also urged panel Chairman Jason Chaffetz, a Republican, to invite Valeant Chief Executive Michael Pearson to testify at a hearing next week. That would put him in the same hot seat as Martin Shkreli, chief executive officer of privately held Turing Pharmaceuticals, who had already been called to testify.

Tiny Turing has been widely criticized for a price hike of more than 5,000 percent for its Daraprim treatment for a dangerous parasitic infection.

Clinton on Monday called on Turing to roll back the $750 price to its original $13.50.

Clinton last week unveiled a plan that includes a $250 monthly cap on out-of-pocket costs for prescription drugs; it would allow the Medicare plan for the elderly to negotiate drug pricing, and permit Americans to buy drugs more cheaply from other countries.

"(Stock) selling hasn't really stopped since Hillary Clinton made her comments last week on Monday," said Jeff Jonas, a portfolio manager with Gabelli funds. "The Democratic committee members would certainly continue that trend that Hillary started."

Biotech Sector Daily



That looks pretty ominous. But let's put a proper perspective on things.

Biotech Sector Weekly



History suggests the recent selloff is just a start of a correction. Charts like those above smack of bubbles, and bubbles typically do not deflate in an orderly manner.

#1 Reason Stocks are Declining

To paraphrase Bill "It's the economy, stupid" Clinton, I suggest "It's the valuations, stupid."

Valuations are well beyond absurd. Many biotechs won't ever make a dime. And it's not just biotechs. Most market segments have absurd valuations.

The market is starting to care, a reflection of a change in sentiment. Hillary's statements may have been a catalyst for a sentiment change, but most likely she merely goosed sentiment that had already changed.

Not to Blame

• China is not to blame.
• Hillary is not to blame.
• Fed hikes are not to blame.

To Blame

Rate hike discussion is not to blame.

However, the Fed itself is to blame for creating the loosey-goosey conditions that fostered a bubble in equities and junk bonds.

The Fed will now have to deal with yet another asset bubble crash (they don't even see coming). Price deflation the Fed foolishly attempted to defeat, is now more likely than ever.

Price deflation never was, nor ever will be, an economic problem. Asset bubbles are always a problem. The Fed still has not figured this out. Thanks to group think, the Fed never will figure this out.

Bubble Debate

For more on bubble valuations and why I expect negative real returns for 7-10 years, please see Bubble Debate; Equity Allocations vs. Shiller PE; Simple World.

Mike "Mish" Shedlock

Self-Driving "WEpod" Shuttles Hit the Road in Europe; Autonomous Car Updates

This November, in the Netherlands, the WEpod six-person passenger van, will become the world's first self-driving vehicle in regular traffic, where cars and trucks also go.

The WEpod can be booked using an app which will allow passengers to reserve a seat and specify their starting points and their destinations. Vehicles are expected to select their itineraries independently.

The electric pod was originally designed by French vehicle manufacturer and robotic specialists EasyMile. It was developed for Citymobil2, an EU-funded project looking at automated road transport systems across urban Europe.

Through Citymobil2, the electric driverless shuttles have already transported 19,000 passengers in Vantaa, Finland and carried passengers on the EPFL university campus, in Lausanne, Switzerland.

The vehicles will initially ride on a fixed route, but it is expected to expand to more routes and other regions in the Netherlands from May 2016 onwards.

Test Phase

The test phase will be on real streets and roads, but not during rush hour. The WEpods will have additional equipment such as cameras, radar, laser and GPS to track the environment.

The maximum initial speed of a WEpod will be a painfully slow 25 kilometers per hour (15.53 miles per hour).

I suspect that may be too slow for safety reasons, not too fast.

Regardless, this will all be worked out soon enough.

Audi on Highway

Looking for highway tests? Then check this out.



Link if video does not play: Audi's Self-Driving Car in Action.

Cars Guide reports First Self-Driving Audi Due in Two Years.



Please note this is 2015. Some people keep telling me that my target of 2020 is way too soon. I still have some Neanderthal readers who insist it will not happen until 2050, if at all.

In limited fashion, it's happening now (November 2015 to be more precise), on real streets, with no standby driver.

Autonomous passenger cars on the US highways by 2020 now seems like a certainty. And millions of truck driving jobs will vanish by 2025.

Mike "Mish" Shedlock

Dallas Fed Region Activity Bad as Expected

The Dallas Fed Manufacturing Survey was as bad as expected in relation to Bloomberg Econoday Consensus of -9.0.

The Dallas Fed rounds out a full run of negative indications on the September factory sector with the general activity index remaining in deeply negative ground at minus 9.5. New orders are at minus 4.6 which, however, is an 8 point improvement from August. Production is actually in positive ground at 0.9.

Other readings include a decline in the workweek and the fifth straight contraction for employment. Price readings show little change for inputs but, like other reports, contraction for finished prices.

The Texas economy has been depressed all year by the energy sector while the nation's factory sector continues getting hurt by weak foreign demand and strength in the dollar.

Additional Details

Here are some additional details from the Dallas Fed Survey.

Texas factory activity was essentially flat in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained near zero (0.9), suggesting output held steady for a second month in a row after several months of declines.

Other indexes of current manufacturing activity increased in September, but some remained in negative territory. The new orders index posted a second negative reading but rose 8 points to -4.6, and the growth rate of orders index also remained below zero but rose to -4.3. The shipments index pushed to around zero from -3, and the capacity utilization index posted its first positive reading in eight months, coming in at 4.9.

Perceptions of broader business conditions remained weak in September. The general business activity index, which has been negative all year, rose 6 points to -9.5. The company outlook index plunged to -10.3 in August but recovered somewhat this month, climbing to -5.2.

Labor market indicators reflected employment declines and shorter workweeks. The September employment index posted a fifth consecutive negative reading, falling to -6.1. Twelve percent of firms reported net hiring, while 18 percent reported net layoffs. The hours worked index fell markedly from 0.6 to -11.1, suggesting a decline in workweek length from August.

Price and wage pressures were mixed in September. The raw materials prices index came in near zero—suggesting stable input prices—after a -8 reading last month. The finished goods prices index remained negative at -10.9, although it was up from a multiyear low of -15.7 in August. Meanwhile, the wages and benefits index remained positive but edged down to 15.6.

Mike "Mish" Shedlock

Refugees Shop for Best Handouts and Climate; Disgruntled Migrants Decide "Finland's No Good"

Beggars can be choosy. And they are. For example, many refugees whine 'Finland's No Good', because of the cold.

Hundreds of predominantly Iraqi migrants who have travelled through Europe to reach Finland are turning back, saying they don't want to stay in the sparsely-populated country on Europe's northern frontier because it's too cold and boring.

Migrants have in recent weeks been crossing back into Sweden at the Haparanda-Tornio border just an hour's drive south of the Arctic Circle, and Finnish authorities have seen a rise in the number of cancelled asylum applications.

"You can tell the world I hate Finland. It's too cold, there's no tea, no restaurants, no bars, nobody on the streets, only cars," 22-year-old Muhammed told AFP in Tornio, as the mercury struggled to inch above 10 degrees Celsius (50 Fahrenheit) on a recent blustery grey day.

He had already travelled from Tornio to the capital Helsinki almost 750 kilometres (465 miles) south, and then back up to the Tornio border again to return to Sweden.

Another group of around 15 Iraqi refugees waiting at the bus station that Tornio shares with its Swedish twin town Haparanda also said they wanted to go back to southern Sweden.

"Finland is no good," the men echoed each other.

Reader Blair who sent me the link commented: "So, the search continues, by those whose lives were in grave danger, for free services... in a nice climate... with a lively social scene."

Mike "Mish" Shedlock

Catalan Separatist Parties Victorious, Unprecedented Voter Turnout

The showdown in Spain between the independence parties and Madrid is sure to heat up following today's elections.

Here is a link to the Live Vote Totals.

With 70% of the vote counted, the parliament totals look like this:



In terms of popular vote, it appears the separatists will fall short of an absolute majority. Separatists will get about 47% of the popular vote.

Pro-Independence Rally on Friday



Above image from Financial Times.

Current totals show prime minister Mariano Rajoy's conservative Popular party is going down in a crushing defeat with only 8.46% of the vote.

Mike "Mish" Shedlock

Total Lunar Eclipse September 27-28: Where to See It, How to Photograph It

There is a Total Lunar Eclipse tonight visible of most of the US. You may want to watch it. The moon will likely appear strong red or orange, giving the name "blood moon".



click on table for sharper image

The Penumbral phase is weak and not easily seen so you may wish to observe it at other times.

Photographer Michael Frye took a time series of the Lunar Eclipse Over the Trona Pinnacles last April.



I missed that eclipse because it totally clouded up here. I will likely miss the one tonight because of clouds.

If your mission is to photograph the the moon, see the above article and also his article Photographing the Lunar Eclipse.



Oak tree and lunar eclipse sequence, December 10, 2011, Sierra foothills, California. ©Michael Frye

Michael Frye is one of the best, if not the best landscape photographer in the US.

I highly recommend his PDF ebook Landscapes in Lightroom: The Essential Step-by-Step Guide.

If you are a photographer using Lightroom, regardless of where you live, please do yourself a favor and get his book, recently updated to include new Lightroom 6 and Photoshop CC features including HDR Merge and the Panorama Merge.

Mike "Mish" Shedlock