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    Seeking out major trends and power shifts in the global economy is a part of my work that I enjoy most.

    It's a lot of work, and needless to say, it involves constant research.

    That's why a piece I recently read in Foreign Affairs absolutely shocked me...

    The piece is a bit revolutionary, as its authors speak to a drastically different way of stimulating an ailing economy than the path we're on today.

    Full story...

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Vaccinate Against This Fiscal Contagion

Editor's Note: Special Contributor Michael Lewitt publishes the highly regarded The Credit Strategist and was recognized by the Financial Times for forecasting both the financial crisis of 2008, and also the credit crisis of 2001-2002. His 2010 book, The Death of Capital: How Creative Policy Can Restore Stability (John Wiley & Sons) was included in the curriculum at the University of Michigan and Brandeis University.

The European financial crisis is often pushed out of the headlines by crises of a more incendiary variety. That might suggest the problem has diminished. It hasn't.

The saga of Portugal's Banco Espirito Santo is a sure sign to investors that the European financial crisis is anything but over. 

Mario Draghi and the European Central Bank (ECB) may keep its finger in the dike, but the dike is only going to spring more holes. 

European banks are still highly leveraged. Their investors are likely to run for the hills at the first sign of trouble, and governments are going to be reluctant to bail them out unless they feel that their collapse poses a systemic risk.

Global investors are, for the most part, shrugging off the problems at Banco Espirito Santo, but European investors are not taking things so lightly. Here's why you shouldn't, either...
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U.S. Labor Department Jobs Report: Big Gains in June, but Still Lagging Behind

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Optimism surrounded Thursday's release of the June U.S. Labor Department Jobs Report, but although the numbers were better than expected, we still have plenty to worry about, and the economy is still in trouble.

Employers added 288,000 jobs in June. The unemployment rate dipped to 6.1% from 6.3%, the lowest level since September 2008.

Despite some encouraging figures in the jobs report, it is still peppered with troubling data - like these dismal numbers...

Stock Market Today Rises – Despite 2.9% GDP Slip – on These Top Stories

The stock market today (Wednesday) rose despite news that the U.S. economy slumped more than expected in the first quarter. Revised GDP figures for Q1 revealed the worst non-recession performance in four decades, with a 2.9% slip. The decline is also the sharpest downturn in five years, and is a significant revision from the 1% decline tallied in April.

And here are the top stories that affected the stock market today:

This "Hidden" Inflation Could Wipe Out Small Returns

Official measures of inflation tell a very different story from the reality facing consumers as they shop for groceries, gasoline, insurance, healthcare, and other everyday goods.

In the real world away from government statistics, product prices continue to rise at an inexorable rate.

Asset prices also continue to rise, particularly the prices of financial assets such as stocks and bonds as well as high-end real estate and art.

While there remain pockets of weakness in the housing markets, the prices of homes have also resumed their upward trajectory after crashing during the financial crisis.

So the question remains: If the prices of just about everything are rising, why is the government telling us that inflation is so low? Full Story

Just How Bad Is the Low Labor Participation Rate for Youth?

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In another sign that the U.S. economy is not as healthy as some in Washington would have you believe, the Bureau of Labor Statistics (BLS) has reported that the labor participation rate among youth aged 16 to 19 in February was a paltry 32.9%.

"The difference between 3% growth in the economy per year versus 2% isn't a 1% slower decline, it's a 33% slower decline, and you're really seeing these numbers add up," said Money Morning Defense & Tech Specialist Michael Robinson on FOX Business' "Varney & Co."

In this video, Michael discusses this troubling trend and offers some suggestions for how Americans can deal with it.

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Profit Massively from This "Margin Call" on American Homeowners

Get ready. There's more trouble ahead for home buyers, home builders, and especially homeowners who took out home-equity lines of credit before the housing crisis. Those heydays have turned into haymakers.

What's already started to happen might not only knock out the formerly aspiring but now petering-out housing recovery, but also might knock the already weak economy to the ground.

Back in the good old days, when banks and mortgage shops were selling mortgage money and home-equity credit lines like carnival barkers wowing crowds into the big top, millions of homeowners stepped right in.

That circus tent was nothing but a trap, however. And now I'm going to tell you what that trap means for those borrowers - and the rest of the economy... Full Story

Low Rates Won't Hide This Looming Threat Forever

Financial markets are experiencing a significant divergence in 2014 between the direction of stocks and bonds.

While the S&P 500 and Dow Jones Industrial Average have traded to new record highs, the yields on benchmark Treasury bonds have dropped sharply.

Normally, one would not expect stock prices to rise and bond yields to drop simultaneously because these movements suggest contradictory readings of the economy.

Higher stock prices indicate bullishness about economic growth, while lower bond yields suggest just the opposite.

However, the inconsistent signals being sent by markets are not as surprising as they seem, given the context of the post-crisis environment in which Federal Reserve policies have distorted normal market pricing mechanisms.

This situation could blindside investors who don't see it coming... Full Story

The Fed's "Growth-Buying" Scheme Is Failing

The numbers are in. And they are ugly...

Based on preliminary first-quarter data, U.S. GDP (gross domestic product) growth is 0.1%.

That's not much.

But then again what do you expect for $3.4 trillion dollars of Federal Reserve spending to boost the economy?

So the question is, how is it possible that we've got nonexistent economic growth, or worse, negative growth and possibly another recession looming, when the Federal Reserve since September 2008 has spent $3.4 trillion to prime the economic pump?

This could push the whole economy past the brink... Full Story

The "Holy Grail" of Energy Investing Is Going to Make You – and Your Grandchildren – Rich

Storage has long been one of energy's biggest "Holy Grails." It holds the key to every significant move into smart grids.

The reason is pretty simple: If energy cannot be stored, it is lost. Even transferring it from one type of energy to another is of little consequence unless you can reverse the erosion in the entire system.

It's called entropy, and it's a pervasive problem.

Now, there are a number of rather complicated ways to explain this, but let's keep ours straightforward. Over time, a system ends up having more energy than can be readily used. This is always the biggest drain on any attempt to structure a more efficient approach.

So the basic question becomes how to "save" all of this energy from being lost.

That's what's at the center of a breakthrough project I came across yesterday...

March Jobs Report: Still Stuck in Second Gear

U.S. Labor Department jobs report The highly anticipated March jobs report out today supported what U.S. Federal Reserve Chair Janet Yellen said earlier this week: The job market is not back to normal and the Fed has more to do on the unemployment front. This morning, the U.S. government announced that the economy barely missed expectations of 200,000 new jobs […]

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Janet Yellen Testimony: Key Takeaways as Fed Stays the Course

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What stands out most from the Janet Yellen testimony Thursday to the Senate Banking Committee is that her remarks mirrored comments made on Feb. 11 in her first monetary policy testimony to a House panel.

Speaking on Capitol Hill about the Semiannual Monetary Report, Yellen repeated that the central bank is likely to maintain its approach of progressively trimming asset purchases. The taper will continue even as policy makers monitor data to determine if the recent spate of soft economy data is temporary or something more serious.

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This One Animal Could Send Food Prices Soaring

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On Tuesday morning, the U.S. Department of Agriculture (USDA) announced it will provide $3 million to help the one animal that will make or break U.S. food prices: bees.

Commercial honeybees pollinate an estimated $15 billion worth of the nation's agricultural produce each year, as reported by The Associated Press on Tuesday. Bees and other pollinators account for one out of every three bites of food Americans consume.

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