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Broken Record - Now U.S. Child Poverty Statistics! 

 

As investors and traders in the financial markets, I urge you to think about this - even if you conclude that the statistics quoted are overblown.

 

An article in the Economic Collapse Blog yesterday is titled 'Child Poverty In America Is Absolutely EXPLODING - 16 Shocking Statistics That Will Break Your Heart'. It will take you about 6 minutes to read this article. The first part of the article recites U.S. child poverty related statistics that if at all accurate, are shocking. All statistics are linked to what I take to be supporting references. These statistics include:

• 22% of American children are said to have 'lived in poverty' in 2010;
• over 35% and 33% of U.S. Black and Hispanic children are said to be living in poverty respectively;
• 7 million U.S. children are said not to be covered by Health Insurance;
• it is projected that by the time they are 18, about one-half of all U.S. children will at some point in their lives have been on food stamps; and,
• more than 20 million U.S. children rely on school meal programs to keep from going hungry. In this regard you may have seen NBC news coverage on Monday evening where it was said that many children who were provided with meals by their schools (this was in a southern state) would have nothing to eat until they returned to school the next day.

The second part of the article is simply another dissertation on the unhappy state of the U.S. unemployment situation, with the link being made to that and U.S. Child Poverty.
 

If you read these e-mails you will know my concern about current youth unemployment in America and generally elsewhere. Think of the implications of a large number America's children living in poverty today in the contexts of education opportunities (or lack thereof), societal differentiation issues where young people of different means and social status co-mingle as they advance through youth to puberty to adulthood, potential escalated crime rates with already reducing police forces in some areas, and jails and rehabilitation centers already overflowing, etc. Also think of the possible consequences of the exercise by parents of what are hereditary and primary 'parenting instincts', and where those parenting instincts may lead in the context of societal disruptions, adult crime, etc.

 

About three years ago in one of these commentaries I related the story of being in New York City cab with a smart 35 year old cab driver who I asked whether the crime rate in New York was escalating. His comment: "At this point not really, but if things get worse economically people have to do what people have to do to survive". I suggest you do not discount what that young cab driver said, particularly if things economic worsen from here. Should such economic worsening occur, I think that cab driver has to be right in what he said.

 

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Strait of Hormuz!

 

Last Thursday, December 8, I included in my e-mail a commentary titled 'And So It Goes - New Arms Race?' - reading time 3 minutes. In that commentary in the context of possible issues initiated by Iran around the Strait of Hormuz I referenced:

 

"the importance of the Strait of Hormuz to Middle East oil supply to international markets (about 20% of daily world oil supplies pass through that Strait which lies along Iran's southern coast)".

 

It turns out that my thoughts of one week ago may be proving to be more predictive than I would like. An article yesterday in the U.K. Daily Mail istitled 'If the world wants to make the region insecure, we will make the world insecure: Iran threatens to shut Strait of Hormuz with military

exercise' - reading time 6 minutes. As I am sure you are aware, the first rumour on Tuesday was that Iran had closed the Strait of Hormuz, and the price of oil went up in an hour by U.S.$3 per barrel to above U.S.$101. That price rise ended when it was clarified that what had been said by Paraviz Sarvari, a member of Iran's National Security Council. Mr. Sarvari apparently said that Iran was planning to hold a military maneuver on 'how to close the Strait of Homez'.

 

Various articles suggest that as little as 20% and as much as 40% of the world's oil passes through the Strait of Hormuz. Irrespective of what percentage is correct, no one denies that the Strait of Hormuz is the world's most important oil transportation seaway. The Strait, which is between Iran and Oman, is 4 miles wide. U.S. Warships patrol the area to ensure safe passage of the oil shipped through it.

 

Aside from reporting on Mr. Sarvari's statement, the balance of the article is devoted to discussing:

• the circumstances around the American Drone that crashed in Iran on December 4, and which the Iranians are now apparently talking about 'reverse engineering', and,

• matters arising out of recent U.S. Congressional Hearings where American witnesses are reported as saying that they favoured carrying out covert actions against a unit of Iran's revolutionary force.

Rightly or wrongly, I see these latter two things as unfortunate extensions of 'business as usual'. I think the Strait of Hormuz commentary is a quite different and potentially extremely important one. It is one I will be following very closely.

 

If you are interested in reading more about the Strait of Hormuz issue, you might read 'Iran proves why the West is playing with fire as it scares oil markets into a frenzy' - reading time 2 minutes. That article was published yesterday by Commodity Online.  

 

Eurozone 'Systemic Bank Crisis'?

 

The word 'systemic' means 'pertaining to a system'. That is, in the case of Eurozone banks an event or series of events that will affect not just one bank, but the entire system of banks that make up the Eurozone banking fraternity - with (my view) spillover to non-Eurozone banks who conduct interactive banking activity with those Eurozone banks.

 

An article Tuesday in the German newspaper, Spiegel, is titled 'The (European Banks) Crisis Has Reached a Systemic Level' - reading time 5 minutes - reports on a European Banks stress test that was reported last week to have found capital shortfall in the banks tested of about 115 billion Euros. In the fall of 2008 Europe was the first geography that pushed a change to the accounting mark-to-market rules, and put that change in place.

 

As you no doubt know from reading these commentaries, I believe the 2008-2009 changes made to the mark-to-market rules in both Europe and the United States likely have resulted in the 'book' or 'accounting' shareholders' equities of many U.S. and European banks currently being overstated relative to what they would have been if the mark-to-market rules had not been changed. If I am correct in this, last week's 'stress test' European Banks capital shortfall will ultimately prove to be understated. That is, the capital shortfall will prove to be greater than 115 billion Euros. If that proves to be the case, it ought to follow that the European Banks and their spillover effect on other world banks will be even more worrisome than many currently believe.

 

Something to think about.  

 

Chinese Village Protest!

 

An article yesterday in The Sydney Morning Herald is titled 'Chinese villagers face riot squads' - reading time 3 minutes. The article reports on a 'village' of 20,000 in the south of China, saying "thousands of Chinese riot police have besieged a village in the south of the country, cutting off supplies of food and water in an attempt to quell a series of riots".

 

You might want to quickly read and think about this event. The article reports that the protestors are protesting "first against having nearly $154 million worth of their land seized and sold off by the local government, and then at the brutal tactics used by police to regain control". I am referencing this article on the basis that I think there is a high probability you otherwise will not be aware of it.

 

The reference to a population of 20,000 being a 'village' reminds me of a conversation my wife and I had with a travel guide in Beijing. The guide asked what Toronto's population was. When told the population of Metropolitan Toronto was over 5 million, he immediately said in a quite pensive tone: "Oh, a village!"

Love America, Or Hate It!

You have to either love or hate America at this point - or so I think. There is really nothing much to say in my view, other than to report on what I am sure you already know - that the U.S. faces an imminent government shutdown tomorrow (December 17), this time over a proposed extension of a payroll tax cut and other tax issues that the Democrats and Republicans continue to bicker over - and that is the third time this year things have come to 'possible imminent shutdown'.

 

If one had to say, something perhaps "How dysfunctional is that!" might suffice. I think this could be said whether compromise is again reached or not. A second thing one might say is that it is hard to believe the Washington politicians (both parties) currently are doing themselves any good with the American electorate in mid-December, 2011 - less than one year away from the next U.S. Presidential election.

 

If you haven't had your fill of this 'stuff', you might read a CNBC December 14 article titled 'Government Shutdown Looms as US Tax Fight Gets Nastier' - reading time 3 minutes.