India’s central bank makes a surprise move to cut its interest rate to 7.75%, after lower-than-expected inflation figures.
Back in November, before most grasped just how serious the collapse in crude was (and would become, as well as its massive implications), we wrote “How The Petrodollar Quietly Died, And Nobody Noticed”, because for the first time in almost two decades, energy-exporting countries would pull their “petrodollars” out of world markets in 2015.
Authored by Jim Clifton, Gallup CEO & Chairman,
The U.S. now ranks not first, not second, not third, but 12th among developed nations in terms of business startup activity. Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does.
We are behind in starting new firms per capita, and this is our single most serious economic problem. Yet it seems like a secret. You never see it mentioned in the media, nor hear from a politician that, for the first time in 35 years, American business deaths now outnumber business births.
The U.S. Census Bureau reports that the total number of new business startups and business closures per year — the birth and death rates of American companies — have crossed for the first time since the measurement began. I am referring to employer businesses, those with one or more employees, the real engines of economic growth. Four hundred thousand new businesses are being born annually nationwide, while 470,000 per year are dying.
You may not have seen this graph before.
Until 2008, startups outpaced business failures by about 100,000 per year. But in the past six years, that number suddenly turned upside down. There has been an underground earthquake. As you read this, we are at minus 70,000 in terms of business survival. The data are very slow coming out of the U.S. Department of Census, via the Small Business Administration, so it lags real time by two years.
Net Number of New U.S. Firms Plummets
Business startups outpaced business failures by about 100,000 per year until 2008. But in the past six years, that number suddenly reversed, and the net number of U.S. startups versus closures is minus 70,000.
My hunch is that no one talks about the birth and death rates of American business because Wall Street and the White House, no matter which party occupies the latter, are two gigantic institutions of persuasion. The White House needs to keep you in the game because their political party needs your vote. Wall Street needs the stock market to boom, even if that boom is fueled by illusion. So both tell us, “The economy is coming back.”
Let's get one thing clear: This economy is never truly coming back unless we reverse the birth and death trends of American businesses.
It is catastrophic to be dead wrong on the biggest issue of the last 50 years — the issue of where jobs come from. Our leadership keeps thinking that the answer to economic growth and ultimately job creation is more innovation, and we continue to invest billions in it. But an innovation is worthless until an entrepreneur creates a business model for it and turns that innovative idea in something customers will buy. Yet current thinking tells us we're on the right track and don't need different strategies, so we continue marching down the path of national decline, believing innovation will save us.
I don't want to sound like a doomsayer, but when small and medium-sized businesses are dying faster than they're being born, so is free enterprise. And when free enterprise dies, America dies with it.
Let's run some numbers. You will often hear from otherwise credible sources that there are 26 million businesses in America. This is misleading; 20 million of these reported “businesses” are inactive companies that have no sales, profits, customers or workers. The only number that is useful and instructive is the number of current operating businesses with one or more employees.
There are only 6 million businesses in the United States with one or more employees. Of those, 3.8 million have four or fewer employees — mom and pop shops owned by people who aren't building a business as much as they are building a life. And God bless them all. That is what America is for. We need every single one of them.
Next, there are about a million companies with five to nine employees, 600,000 businesses with 10 to 19 employees, and 500,000 companies with 20 to 99 employees. There are 90,000 businesses with 100 to 499 employees. And there are just 18,000 with 500 employees or more, and that figure includes about a thousand companies with 10,000 employees or more. Altogether, that is America, Inc.
Let me be very clear. America, Inc. is far more important to America's security than our military. Because without the former prospering — and solvent — there is no latter. We have enormous military power only because of a growing economy that has, so far, made it possible for the government to pay its bills. When former Chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, was asked in a Senate hearing on June 28, 2011, to name the biggest current threat to the security of the United States, he didn't say al-Qaida. He didn't say Iran's nuclear capabilities. He answered, “I believe our debt is the greatest threat to our national security.”
Declining Businesses Mean Declining Revenues for Social Spending
Keep in mind that these 6 million businesses, especially small and medium-sized ones, provide jobs for more than 100 million Americans and much of the tax base for everything. These small, medium and big businesses have generated the biggest economy in the world, which has allowed the country to afford lavish military and social spending and entitlements. And we've been able to afford all of this because, until now, we've dominated the world economy.
When new businesses aren't being born, the free enterprise system and jobs decline. And without a growing free enterprise system, without a growing entrepreneurial economy, there are no new good jobs. That means declining revenues and smaller salaries to tax, followed by declining aid for the elderly and poor and declining funding for the military, for education, for infrastructure — declining revenues for everything.
America has maintained the biggest tax coffers in the world because its 300+ million citizens have produced and owned one-quarter of virtually all global wealth. The United States clobbered everyone in the battle of free enterprise, in the battle of business building, and in the battle of inventing the future. Until recently, America had blown the world away in terms of economic success. We are now quickly losing that edge, and everything we're trying to do to fix the problem is dead wrong.
Here's why: Entrepreneurship is not systematically built into our culture the way innovation or intellectual development is. You might say, “Well, I see a lot of entrepreneurial activity in the country.” Yes, that's true, but entrepreneurship is now in decline for the first time since the U.S. government started measuring it.
The whole country and subsequently the world are having their own dead-wrong moment, and it is causing America and the whole world to make everything worse. And people know it, though they may not know why. When Gallup asked Americans to rate how much they personally worry about particular problems facing the country, the top three issues that respondents worry about a “great deal” were the economy (59%), federal spending and the budget deficit (58%), and the availability and affordability of healthcare (57%).
The more we execute on our leadership's erroneous belief in innovation, the more our engine stalls out — and the more people rightly worry about economic issues.
Because we have misdiagnosed the cause and effect of economic growth, we have misdiagnosed the cause and effect of job creation. To get back on track, we need to quit pinning everything on innovation, and we need to start focusing on the almighty entrepreneurs and business builders. And that means we have to find them.
Submitted by Brandon Smith via Alt-Market.com,
I was in the middle of working on an article covering real U.S. economic stats versus manipulated statistics when the Charlie Hebdo shootings took place. And though I knew the implications of the event would be far-reaching, I was originally undeterred from my financial subject matter. I had already covered in previous articles the inevitability of ISIS attacks on Europe and America, including the “warnings” of Saudi Arabia in August of last year that jihadists would target the EU within months and the U.S. a month later.
In September of last year, ISIS publicly urged attacks on French and U.S. citizens.
I have also published extensive analysis on the covert funding and training of ISIS militants by Saudi Arabia and Western intelligence agencies, including my article “The Time Is Ripe For A False Flag Attack On American Soil.”
The bottom line is the Paris attack was not surprising in the slightest. I have no doubt whatsoever that such attacks are going to increase in frequency, that the U.S. will be hit soon, and that our government will do little to nothing to stop such tragedies. However, a Reuters article titled “White House to hold global security summit Feb (sic) 18: U.S. official” caught my eye. And after reading it, I’m afraid I have to set aside my financial piece until next week and break down the insanity that is now taking place in the world of geopolitics.
It is clear by the language being used by the political elite that the “global summit” called in the wake of the Charlie Hebdo attacks is about far more than radical Islamic terrorism. Set aside the fact that our government essentially created ISIS in order to destabilize Syria. Set aside the fact that globalist middlemen like John McCain and “former” covert ops goons like Gen. Paul Vallely have met directly with groups like the Nusra Front that are providing support for ISIS. Set aside the fact that Saudi Arabia has been openly funneling cash and arms to Syrian terrorist factions tied to ISIS, and realize that the mere existence of ISIS, regardless of its origins, is being used as a rationale for the erasure of civil liberties and the establishment of martial law on both sides of the Atlantic. Such federalized reactions CANNOT be allowed to continue, regardless of the threats each nation faces.
As far as the Reuters article is concerned, one does not need to read very far between the lines to see the true message being conveyed.
First, the focus of the summit is not necessarily indicated as “Islamic terrorism.” In fact, the word “terrorism” is barely mentioned. Now politicos are shifting their language to the term “extremism,” which is far broader in its implications. It should be noted that while the terrorist label has been bandied about rather liberally by both the Bush and Obama administrations, “extremism” offers greater cover for governments to persecute or attack political opponents. A terrorist is generally someone who initiates or at least plans a large-scale attack designed to illicit a fear response in a population. An extremist, on the other hand, could literally be anyone who holds views or initiates activism outside acceptable forms of mainstream thought. Attorney General Eric Holder did not use the words “terrorism” or “jihadist” in his announcement of the global summit in February; he used the phrase “violent extremism”:
We will bring together all of our allies to discuss ways in which we can counteract this violent extremism that exists around the world…
Throughout history, “violence,” according to governments, is often attributed to ideas as well as actions. The point is the change in vocabulary over to the extremist label is not accidental or coincidental. The establishment is conditioning the public to think in broad terms and to identify numerous groups as the enemy, rather than focusing on radical Islam.
It’s Different This Time… (for now)…
For uber-wealthy Russians, “an apartment in Miami, even the most glorious beachfront apartment, is not a priority right now,” warns one real estate attorney, as The New York Observer reports Russian buyers no longer felt they had the liquid assets to carry on with the transaction and were looking to break closed real estate contracts. “Your average Russian buyer tends to be someone who works in the $5, $10, $15 million range. Obviously very wealthy people, but also people who are much more likely to feel a pinch given the economic situation and the exchange rate,” and with maintenance costs sky-high, the trophy apartments have shifted from 'safe-deposit-boxes' out of reach of sanctions to burdensome drains.
Explaining below-target inflation to a chancellor who welcomes it
Troubled smartphone maker Blackberry sees its shares rise 30% on a report that Samsung had offered to buy it.