More Banker Fiascos - US Consmer Spending Stalls - US GDP Growth Falls - UK GDP Growth Poor

ANOTHER BANK FIASCO

TSB Bank in the UK upgraded their computer system last week. For 5 days, many customers could not trust their account information, access their accounts or stay logged on to the bank's online website. Another banker fiasco.

BOOM just checked their website (8 am Sunday 29th April '18 London) and found the following --

Internet Banking: "We’re sorry, we know some customers are having issues logging into Internet Banking. We’re working hard to fix this."

Mobile Banking : "We’re sorry, we know some customers are having issues using the mobile app and our Business Banking Authentication app and are seeing a ‘Something went wrong’ message when they try to log in. Please try closing down and relaunching the app - you may need to repeat this a couple of times. We’re working hard to fix this."

Branches: "Please be aware that our branches are currently busier than usual and it may take us longer than usual to help you."

DEUTSCHE BANK FIASCO

300 bankers in the USA got fired last week. And it looks like another 100 will also be fired before the end of next week. All of them made the mistake of working for Deutsche Bank, the giant German bank that just saw its net profit collapse by almost 80%.

In May 2007, Deutsche Bank shares were worth almost $ 160 on the New York stock exchange. Some suckers bought the stock at those prices. Today, they are worth less than $ 14. Who said that banks are always great investments? Another banker fiasco.

There is a message currently on DB's website from the CEO, Christian Sewing -- 

"Even a quick look at the figures makes one thing clear: we have to take action – fast".  

And later: "All too often in the past we have failed to follow through on the objectives we set ourselves with the persistence we needed. We have to regain our credibility".

BOOM has to agree. Maybe Christian finally took a look at DB's stock price performance?

US CONSUMER SPENDING FALLS SHARPLY -- US GDP GROWTH FALLS

The US economic statistics for the first quarter were released on Friday and there was little reaction from the financial markets.

US Consumer spending slowed sharply from 4% growth rate in the fourth quarter of 2017 to just 1.1% in the first three months of 2018. The consumer accounts for 70 percent of economic activity as measured by spending. So this is a very concerning fall. Mr Trump has failed to take the consumer with him on his spending spree.

GDP Growth in the first three months was 2.3%. This has fallen from 2.9% at the end of last year. Again, Mr Trump has failed in the economic sphere.

So, as BOOM outlined in the editorial 2 weeks ago, the American GDP is growing only because the Federal Government is spending like a drunken sailor. That money comes from taxation revenues and government Bond issuance. It is sucked out of the economy and spent back into it. BOOM does not think that qualifies as "growth" but the way GDP is calculated is rather odd with government spending being regarded as equal to household and corporate spending. Go figure. Another weird aspect of modern, mainstream economics.

Quote: BOOM Editorial just 2 weeks ago -- 

"So in reality, despite the official narrative that "the US economy is in a strong recovery", the private sector of the US economy is actually moribund with the economy as a whole relying more and more upon government bond issuance and increased government expenditures. In other words, it is steadily moving away from the capitalist business cycle."

There was one good sign -- U.S. private sector workers saw their wages go up 1 percent in the first quarter, the biggest quarterly gain in 11 years. This is a welcome sign for the long suffering worker in America. Real median household income in the USA has not improved much for almost 30 years, since 1999. This is from official census data, by the way, not mainstream media spin.

UK GDP GROWTH POOR

GDP Growth in the UK is the worst recorded in 5 years. In the first three months of 2018, GDP growth was a barely positive 0.1%. Spending fell sharply in construction and manufacturing. Again, as in the US, the consumer was recalcitrant with spending from that all-important sector only growing by 0.3%.

This is terrible news for Theresa May (also known as Theresa Mayhem) and the central bankers at the Bank of England. They must all be wondering what is happening. Perhaps they should all read BOOM? This is what BOOM said about the UK four months ago.

Quote: BOOM Editorial 7th January 2018:-

"BOOM expects the UK and France to be the key nations at risk because of their size, complexity and inability to respond quickly to negative external effects such as the impact of Brexit and the now clearly sick European Union. Watch those nations as the future unfolds."

In economics, things work until they don't.

Until next week ............ Make your own conclusions, do your own research.

BOOM does not offer investment advice.