Another Crushing Bernie Sanders Defeat Makes U.S. Financial Policy Reform Unlikely

Hillary Clinton v Bernie SandersIt’s been an interesting election process so far. The Republican Party finds itself in the undesirable position of having to pick their presidential nominee from an ever shrinking pond of favorable candidates. As it stands, the convention appears to come down to either Donald Trump or Ted Cruz. Neither of these two candidates appeal to the Republican establishment, which has sparked numerous rumors of the GOP head honchos doing everything in their power to ensure the Republican convention becomes a contested event. In such a scenario, with neither Trump nor Cruz in possession of the required number of delegates needed to secure the nomination, all the pledged delegates become up for grabs if the voting goes past the first ballot. This would leave the field wide open for other candidates that didn’t even run in the primaries, and is the best hope the Republicans have got left in order to save political face and their own platform.

The Democratic primary has been less of a docudrama, with Hillary Clinton predictably emerging as the top contestant. But even here, the dissatisfaction with the political equilibrium can be felt. Democratic Socialist Bernie Sanders has performed better than originally predicted in the primaries, showing a public desire to restore liberal values to a party that has lately become more known for promoting neo-conservative policies rather than liberal. In terms of economic views, Clinton’s campaign has suffered consistent critique for being too lenient on Wall Street and big corporations. Like Obama before her, Clinton is actually more of a conservative when it comes to financial reform in today’s American climate. It is in this setting that Sanders’ promises of completely overhauling the nation’s economic policies have taken root, with his intentions of taking the fight directly to investment bankers and overpaid CEO’s making him the prime contender to Mrs. Clinton’s reign.

Only, it won’t be enough – at least not this time around.

After securing a double-digit victory in the state of New York, Clinton not only defeated Sanders in getting the votes of the majority of pledged delegates, but also acquired over two dozen of the party’s notorious “superdelegates” that will boost her votes at the Democratic Party Convention. Superdelegates consist of party seniors and elected officials given mandate to vote as free agents in order to prevent the rise of political populists that may be counterproductive to desired party lines. Sanders literally falls under this description and his failure to get unpledged delegates speaks to this fact.

Bernie Sanders - The People's Choice

Based on the latest numbers from Democratic primaries and caucuses, Clinton is in the lead with 1,428 delegates versus Sanders’ 1,151. This may seem like a pretty even race, until you factor in the superdelegates, then the field looks a whole lot different. With 502 superdelegates pledging their allegiance to Clinton against 38 for Sanders, the current number total stands at 1,930 to 1,189. The number of delegates required to secure the Democratic nomination is 2,383, and Clinton only needs to win 27 percent of the remaining delegates to get there. Sanders, on the other hand, has to win a staggering 73 percent of the delegates still up for grabs, meaning Clinton could afford to lose every remaining primary and still come out the winner.

One Happy Clinton

Sanders remains characteristically optimistic, claiming that if he manages to edge closer to Clinton in primaries and caucuses, his popularity among the party’s voters base will convince the superdelegates to switch over to his camp to not risk the wrath of their own supporters. Party regulations clearly state that unpledged delegates are free to change their vote at any given time, but as of yet, none of the delegates loyal to Clinton have abandoned ship. As the primary process continues, it’s becoming obvious that 2016 won’t be the year for radical financial reform in the United States.

Taking a Stand for Political Discourse: School Teachers Vote Against Preventive Measures

schoolThere’s been a lot of talk concerning the growing radicalization of society’s youth. With the latest terror attack on Brussels by ISIS fresh on everyone’s mind and the rise of rightwing extremism in Europe as a response to the Syrian refugee crisis, governments are taking preventive measures to stop extremist ideologies on either side from taking root in young adults. But now, British teachers are warning the public that such strategies are counter-productive, as they will only lead to diminish open debate and the amount of free speech allowed in schools.

An overwhelming vote at the National Union of Teachers conference in Brighton shows that the majority of educational professionals are firmly against this kind of censorship. Rather than creating a safe environment for students, this approach only serves to create additional confusion and suspicion in a fragile setting. There’s genuine concern that the anti-radicalization policy released by the Department for Education will prevent teachers from even approaching the subject of controversial ideas in front of their students. This is the last thing the education system needs, according to the teachers. Especially in a time when politically correct discourse without compromise appears to be the rule of thumb, creating an environment of fear to offend.

We’ve already had plenty of reports involving students being reprimanded and even arrested for questionable acts and statements. There are obviously limits to what falls under the protection of free speech, but many teachers claim that they are no longer able to talk about certain sensitive issues, that are no less important political and social developments, and how these kinds of policies cripple the discussion of legitimate topics and opinions. Students and teachers can’t have an open debate if they fear to be constantly punished for expressing an opinion.

stop terrorism

The NUT calls on the government to suspend the preventive measure strategy in favor of a more flexible policy meant to deal with the rise of radicalization. There’s also criticism against the details of the strategy, as many teachers feel that it unfairly targets Muslims and could potentially spark extremism rather than quench it. Teachers should be there to educate first, not become the watchdogs of the government’s anti-terrorist agencies. While schools have a moral obligation to protect their pupils, the freedom to openly discuss these subjects will have more beneficial results than outright banning them. Kids are likely to come across these ideas outside of school, regardless, making the ability to objectively deconstruct them in a safe setting a priority in preventing extremism.

knowledge is power

The response from the Department of Education is quite clear. The government makes no apology for protecting the country’s youth from radicalization and extremism, with the Security Act that was passed in 2015 placing a legal obligation on schools to prevent students from being drawn into acts of terrorism. It’s not meant to limit discussion and open debate, but aims to equip students with the necessary fortitude to reject illegal actions when exposed to them.

The NUT remains reluctant toward the government’s statement, maintaining that schools have been keeping children safe from the dangers of extremism for a long time, and that this new policy is not only unnecessary, but a major obstacle for the education sector.

Back from the Brink of Disaster: Can the American Economy Make a Full Recovery?

oh noes, the economyWhen Obama took over the oval office from Bush in 2008, he had his work cut out for him, to put it mildly. The economy was on the brink of complete collapse and the entire US financial system was more or less insolvent. Needless to say, the administration and the people had a rough time ahead.

Fastforward to 2016, and some would say they managed the crisis quite well, given the circumstances. The US budget deficit for 2009 was close to 10% of the country’s GDP, or almost $1.5 trillion, with the Bush administration losing over 10 billion dollar every month on war expenditures in Iraq and Afghanistan. In 2015, the Obama administration had shrunk that deficit to $480 billion dollar, less than 4% of the US GDP. Say what you will about party lines, but that’s a major improvement (more than $900 billion).

As the president hands over the reigns to whichever candidate who succeeds in the 2016 election, the total budget deficit stands below 3%, which is considered low in comparison to other nations, as well as the country’s own economical track record. Since governments almost never run a surplus, and the fact that the deficit always increases in nominal terms, a number of 2-3% would lead you to believe all is finally well and it’s back to business as usual. The twin disasters of the financial crisis and the wars in the Middle East have been rectified by an administration responsible for neither. Obama had the thankless task of saving a sinking ship and was forced to spend most of the time in office trying to salvage whatever he could. Not only did he keep the boat afloat, but he also managed to turn its course around and head towards calmer waters. He can now proudly leave his two terms in office behind him, knowing that both the US deficit and overall debt look far better in international comparison than when he was first elected.

US national debt ceiling

However, the emergency laws and regulations that were implemented to bring America back from the edge of fiscal doom have had repercussions. These are now starting to show in the records, with the IMF expressing sincere concern that the US economical growth is slowing down at an alarming pace. This will have a ripple effect on the global economy and might trigger another recession. Obama’s opposition claims that the stimulative programs he enforced were misdirected and only managed to delay the financial breakdown, not avert it.

On top of that, America faces another long-term challenge that plagues other OECD members: An ever-increasing aging of the population. When a high-productive society suffers from a populace-bleeding due to aging, the rise in expenditures like pension plans and healthcare, coupled with a matching decrease in productivity, consumption and overall growth, always leads to an inflationary state and ultimately recession, if left untended. This is a major factor for the US, where healthcare heavily dominates government spending. The Obama administration sought to correct this by introducing the Affordable Care Act, all while taking heavy fire from Congress. The goal was to setup a more rational healthcare system, but unfortunately it merely shifted the problem around. The US still spends close to 20% of its allocated budget on healthcare services. That’s nearly 10% more than the next highest number in the OECD.

To put things in perspective, if the US would spend the same amount per capita as other nations, the country would be running an annual budget surplus of almost $500 billion instead of a deficit of the same number. The Obama detractors in the House and the Senate are still fighting a fierce battle to stop the US from adapting a single-payer system, backed by the lobbyists of the medical insurance industry. A half-measured compromise was all that could be achieved, and this will have a huge impact once the economy begins to slow down. Military operations overseas also contribute to the fragile state of the American economy, but less so than healthcare, which remains the largest factor in balancing the federal budget and national debt.

US national debt

As it stands, Hillary Clinton will most likely be the Democrat nominee and the next president. Although a more rational choice than Donald Trump or Ted Cruz, she’s will probably strive to not upset the status quo too much, unlike Bernie Sanders. Without the political will to implement the necessary reforms, the fate of the American economy still hangs in balance. Only time will tell if we will see another great recession. In the meantime, you’d be wise to tread with caution when it comes to your financial choices.

Gold Bars for Sale – Prudent Investment or a Golden Calf?

gold bars for saleShould you invest your money in gold? Some say yes, as a personal supply of gold bars is the best way to keep your wealth safe when the global economy collapses. Others say no, since the economy is steadily improving and the stock markets are showing growth in performance.

Who should you listen to, the doom and gloom crowd or the naive optimists?

If you belong to the former crowd, buying up as many gold bars for sale as you can get your hands on would be on the top of your list of financial priorities, and is still an easy task for any investor. It’s simply a matter of finding a gold seller, either locally or online, and start buying. Most gold companies that can be found on the web offer their customers an extensive variety of gold bars for sale. You can have your gold sent straight to your front door for personal safekeeping, or you can have it stored with a precious metal custodian of your choice. Your purchased gold bars will be held in a segregated storage space in a secure vault and you’ll receive regularly updated statements on the status of your account and supply. On paper, your gold bars will be kept in a self-directed IRA, an individual retirement account that allows for investments in rare commodities and precious metals.

gold investment

Private investors are currently buying gold bars like never before in preparation of another big recession period. But is this likely to happen? Let’s look at some of the arguments among the pro-gold demographic.

The US dollar is barely scraping by as it stands, mostly due frantic attempts by the Fed and the government to hold off another economic crisis. Meanwhile, job opportunities are disappearing like leaves in the wind, living standards are in decline and poverty levels are at an all time high. The markets are only holding it together thanks to an enormous influx of liquidity, but the wealth isn’t trickling down but is instead creating a dangerous, inflated economic environment that could implode at any moment. It’s already happened twice in the past hundred years, and given the fact that the last crash never had a full correction, and that the big banks are resuming the game of hazardous distribution of financial products, it’s just a matter of time before the bubble bursts once more and the economy comes to a halt. The US is currently 19 trillion dollars in debt and with the Fed printing out massive amounts of paper money to hold off the rising tide, the dollar will only get weaker, until it finally collapses completely and takes the entire economy down it. When this happens, gold will be one of the few assets that is able to retain its value, making it the currency of choice for both trade and financial security. Because of this, the global demand for gold bars for sale will climb to unprecedented highs, making gold not only a means to effectively protect your wealth, but to increase it, as well.

self-directed gold-backed IRA

So what does the other side of have to say about buying gold bars? Why is gold a flawed investment in their opinion?

The biggest argument against investing in gold is obvious. Unlike stocks and bonds, precious metals don’t yield any return while being stored. You don’t get to collect any annual percentage off your gold bar supply, making the only time that profits enter the equation to be during transactions – buying and selling gold bars. Gold has traditionally risen in value thanks to its growing appreciation in currency and trademark as a safe go-to option in risky times. But since the economy keeps improving and the annual national debt keeps shrinking, there’s no real reason for an investor to buy gold bars at this moment. The banks are being kept in check by the SEC and the Federal Reserve is managing interest rates at a low level. We’ve finally come out of the last recession and things are looking up. As long as the dollar keeps performing strong against other currencies, there are better investments than gold available.

personal gold bar supply

Personally, I believe in keeping a well-diversified investment portfolio, ranging from company stocks to commodities. That being said, with the way things are going on the international markets, now is a good time to keep a healthy set of cash on hand for those rainy days that eventually will come. And if you’re going to keep cash around, why not invest in gold for that extra layer of wealth protection? It’s generally considered equal to cash, anyway, but more secure than paper bills that are currently being mass-produced at an alarming rate. Fact is, we never had a proper end to the Great Recession and the backlash is destined to hit us sooner or later.

I don’t think there’s any reason to go into panic mode, but your regular 401k and even your real estate assets are not guaranteed to survive the next slowdown. We’re more intertwined with economic developments in other countries than ever before. The conflicts in Asia and the Middle East, the big drop in oil prices, the repeated failures to meet estimated market numbers etc. They all point in one direction and it’s not a very positive one. Right now is as good a time as any to invest in a healthy supply of gold bars, while prices are still relatively low. I’d say at least 25% of your portfolio should consist of gold and precious metals, but that’s obviously your decision.

Winners take risks, but they’re all calculated ones.

For a Handful of Dollars: American Wealth Inequality

american wealth inequalityEver since man discovered the power of possession, there’s been inequality in every community and society ever created. Unequal distribution of available resources is probably the prominent cause of conflict and unrest throughout history. This hardly comes as a surprise to anyone, but when you look closer at just how big the gap between wealthy and poor has grown in recent times, you can’t help but wonder if there’s something inherently flawed with our current system.

The United States is the world’s leading economy and has consistently been hailed as the prime example of capitalism in its purest and finest form. It’s the land of opportunity, where everyone has the same chance of making his or her own fortune. Sure, far from all who try end up richer than Uncle Scrooge, but even if you fail to make billions of dollars, you can still enjoy living the good life in one of the most economically equal countries on the planet. But how true is this claim, really? A quick glance at actual wealth distribution in modern day America tells you another story entirely.

actual wealth distribution

As you can see, the vast majority of wealth and the resources it purchases are in the hands of a very select few. Adjudicators for the status quo argue that wealth inequality is inevitable and actually a preferred template to promote economic growth and stability. Those on the lower end of the chart naturally want to climb the ladder, while the spending habits of the rich distribute enough wealth to the “lower tiers” to close the circle and keep the wheel spinning. The concept of trickle-down economics was pushed by the Reagan administration in the 1980’s with the idea of a wealthy minority as a economic catalyst at its center. It was supposed to be an unequal but simultaneously fair system.

At least that was the theory.

For the people who still believe in the overall benefits of extreme wealth inequality, let’s take a look at another theory: The Gini coefficient. The principle is based on measurements of equality where a completely equal society scores a 0. A Gini coefficient of 0 means every single member of society has the same annual income. On the other end of the spectrum is a society where a single individual is in possession of all income while everyone else has none at all. The Gini coefficient for such a scenario would be 1. By applying this theory to wealth and poverty rates, you get a good picture of how well America is performing compared to other countries.

gini coefficient

The higher the Gini coefficient goes, the more likely it becomes for the person with an average income to end up below the poverty line, as in not having enough wealth to have a positive impact on the overall economy. What becomes painfully obvious when examining the chart is that even if you’re a modestly paid citizen, you’re not able to much more than survive in modern America.

That’s not a fair system by any stretch of the imagination.

The United States are more in tune with the economic conditions of Mexico than with most developed European nations. How are average Mexican living standards faring when compared to, say, Denmark? Not very well, I’m afraid. The wealth available to the lower class has kept decreasing over the last decades to the point where the majority don’t have any equity to spend at all after paying for the basic necessities, such as taxes, rent, food, water, electricity and transportation.

A system where the foundation has no economic mobility cannot sustain itself other than in short time periods before it collapses and has to be restructured. If America wishes to remain a financial world leader, it has to begin distributing wealth to the majority, or risk losing out to Asian and South American competitors. When you take away the spending abilities of the lower and middle class, you severely cripple social mobility of a country, leading to higher inequality that will ultimately result in civil unrest and violent conflict.

The United States of America as a nation has to start realizing the many issues that arise from extreme wealth inequality and do something to correct them if it wants to remain the land of the truly free. A system where people have to struggle to stay alive, despite all their genuine efforts to better their conditions, is doomed to fail and will take the top tier with it when it does so.