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- Does Gold Collapse Now?
- Young Americans Learn That Trying To Find Work Is Pointless
- Only One Thing Matters In Global Markets Today — Shanghai
- Are We About To Go The Way Of The British Empire?
Up until a few days ago, gold only seemed to be going in one direction. But there have been shifts all over the place. The euro is rallying, stocks are slumping, and the dollar is slumping.
As such, the recent decline in gold doesn't just look a brief step down, but potentially an actual reversal in direction.
A growing crowd has been calling gold a bubble of late, and there's no obvious place for it to stop falling.
While the U.S. has experienced some job creation during the rebound so far, unemployment for America's youngest job seekers continues to get worse, not even slightly better.
That's because the new jobs of today aren't open to them, according to a study called 'Unemployment Among Young Workers' by the U.S. Congress Joint Economic Committee:
'Employers added over half a million jobs in the last four months, yet the unemployment rate for young workers reached a record 19.6 per cent in April 2010, the highest level for this age group since the Bureau of labour Statistics began tracking unemployment in 1947... The youngest workers (16 to 17 years) experience the highest rates of unemployment. The unemployment rate for 16 to 17 year olds was 29 per cent in April.'
The chart below shows how the unemployment rate for America's youngest (in red) continues to get worse, even while other age groups' unemployment rates have plateaued or slightly declined (in blue or green). The rebound so far, however small, hasn't even started for the young.
One reason explained in the report is that older workers are now taking jobs previously reserved for the youngest due to a dearth of opportunities. Another is that industries which employed young workers were hit disproportionately hard during the downturn, such as hospitality and retail. Education is also now more important than ever in securing an available job, with higher education massively reducing one's probability of being unemployed.
Yet education doesn't explain everything. For example, one disturbing figure from the report shows that young black college graduates have double the unemployment rate (15.8%) of other young college graduates. For many of America's budding job seekers such as these, hitting the pavement and trying to work has proven itself completely futile. Take it as a lesson from the New Normal.
Historically, investors, especially American ones, like to think that global markets take their cue from what's happening in the American stock market, which is the largest in the world. If American stocks start falling due to American concerns, then the rest of the world follows its lead.
This may have been true in the past, but most recently it's not so clear. As a chart from Waverly Advisors' Macro Report shows, the Chinese stock market has actually been a leading indicator over the last few years for both U.S. stocks and global commodities, as shown below.
While correlation doesn't always imply causation, traders have to admit that recently it's as if markets around the world have taken their cues from stock market confidence gauge in Shanghai. The performance of Chinese stock market speculators has been leading key turning points of both U.S. stock and commodities portfolios, and not vice versa. Note Shanghai's peak and trough in 2007 and 2008 respectively, in orange.
Sovereign debt and its impact on the ability of a state to maintain government spending levels is a key topic perplexing the world right now.
But what is obvious is that, as debt levels increase, the power of state's and their empires are endangered.
The British Empire may teach the American an excellent history lesson. From World War I to the end of World War II, the British Empire's debts increased, much of it to a growing power in the United States that supplied it with arms.
For the U.S. today, China could be that supplier of goods, rather than guns, as the U.S. government racks up debt on the way to its decline.
Of course, this fate is far from certain, and there were many more reasons why the British Empire declined than just debt levels.