reality is only those delusions that we have in common...

Saturday, August 8, 2009

week ending Aug 8

Jobs Report Roundup - links to several other articles, graphs, etc.

Economists React to Jobless Report - NYTimes

Unemployment Report Distortions - The news:
U.S. economy sheds fewer jobs than expected
WASHINGTON (Reuters) - U.S. employers cut 247,000 jobs in July, far less than expected... with fewer workers being laid off, the unemployment rate eased to 9.4 percent in July from 9.5
percent. Wait, how can you lose jobs and have the rate of unemployment fall?
Jobs paradox? - Krugman - Some readers have asked how it’s possible for unemployment to fall when the economy is still losing jobs...
The unemployment data was still bad

Jobless Rate Challenges Fed Outlook WSJ

Econbrowser: Good News and Bad News from the GDP release --

"The GDP is on life support administered by the federal government."and here's a further breakdown of The Composition of GDP During the Recessions

Atlanta Fed's macroblog: GDP benchmark revisions: Count me very surprised

The Fed Buys Last Week's Treasury Notes - This $14 billion plus buying activity by the Fed represents fresh money created out of thin air that was exchanged for the sovereign debt of the US. However, since the Fed has, for all practical purposes, never undone its "permanent operations" we can consider these additions of money as good as permanent themselves.
" Just last week, when the auction results were announced it was trumpeted to great fanfare that there was "more than sufficient" bid-to-cover, "strong demand" and all the rest"
Fed POMO activity and the Stock Market "we find that the Federal Reserve is printing up roughly $15 to $30 billion dollars a day just to keep things limping along."

Geithner asks Congress for higher U.S. debt limit - saying that it could be breached as early as mid-October.

Ben Bernanke's failure at the Fed - -Dean Baker, Guardian

Laundering Money through the Big Banks: Bernanke's Quid Pro Quo

Ben Bernanke Was Incredibly, Uncannily Wrong (Mises) The new video is a compilation of the 2005–2007 prognostications of Federal Reserve Chairman Ben Bernanke.

Why Bernanke is in panic mode - Stammering and stuttering are a real departure for him. There is a reason for this. For the first time since 1914, there is a public debate in Congress over the Federal Reserve’s power. "If Congress compels a full audit – a real audit, not a FED-controlled audit – individual members of Congress will discover that the American financial system is a house of cards. A few of them will release the results of the audit to the public."

Six economists on why we should not audit the Fed.

What the Fed is REALLY Trying to Hide In Fighting an Audit - "what the Fed is really struggling to keep hidden is the fact that the entire financial system is based on massive manipulation and fraud by the Fed and its primary dealers."

In Fed We Trust. - Economics of Contempt - Quotes/Revelations from Wessel book

The Mess that Greenspan Made - Confidence games and Ponzi schemes

Wall Street profits from trades with Fed
"The Fed has emerged as one of Wall Street’s biggest customers during the financial crisis, buying massive amounts of securities to help stabilise the markets."

No end in sight for bank bailouts - Even as the industry recovers, winding down last year's rescue programs and new ones put in place may be easier said than done

U.S. Considers Remaking Mortgage Giants - 'Bad Bank' Would Wipe the Slate Clean for Fannie Mae, Freddie Mac by Taking Their Toxic Loans...and here's the definitive complete analysis of those agencies and the likely potential that we'd be left with another trillion bailout: Another underwater continent

Should the Fed Be Buying Fannie Debt? - This is not a small change is difficult to see the benefits of the purchases

Scandal Makes its Way to Sallie Mae - This finding makes Sallie Mae the latest in an increasingly long line of lenders to get caught overbilling the government for student loan subsidies under the "9.5 percent student loan scandal."

$75 Billion In New Treasuries On Deck -
If you missed your chance to stock up on double ply UST (T is for toilet) paper, fear not: you will have another chance to buy some again... and again... and again...

Bank regulators dig in against Obama shake-up - In private remarks punctuated with expletives, Geithner urged the regulators to end their turf battles and show support for President Barack Obama's plan...

America needs a single bank regulator - Financial Times OpEd

Loaded For Bair (Slate - Big Money) regarded as the sole member of the Bush administration’s crisis rescue team to have recognized early both the magnitude of the fraudulence in the mortgage business and the magnitude of the risk that fraud posed to the financial system, Bair has distinguished herself as our most populist regulator...

Financial Services Industry Working With GOP To Plan August Lobbying Offensive - trying to head off the movement to create a Consumer Financial Protection Agency (CFPA).

Avoiding the Tail Wagging the Dog - discusses limits on derivatives... core reason for this is to shrink derivative activity so that it is smaller than the underlying markets...

High-frequency trading - Rise of the machines - The Economist

SEC Plans To Ban ‘Flash Trades’ That Give Advance Info To Certain Traders SEC Chair Schapiro Pledges That A Ban On The Controversial Practice Is Imminent

The Great American Bubble Machine - by Matt Taibbi &
The Baseline Scenario breaks it all down in How To Blow A Bubble

here's Charlie Gasparino on why Taibbi is dead wrong, & CJR saying Don’t Dismiss Taibbi ...

Goldman CEO Tells Employees to Tone Down Spending Lloyd Blankfein is telling employees of the powerful bank to avoid displays of conspicuous consumption, the New York Post reports.

Goldman Sachs admits it's under government investigation - Raw Story

AIG says it's paying $1.1 billion to retain key employees
Government-owned insurer estimates plan already has cost $824 million

After $182 billion taxpayer rescue, is AIG on the verge of collapse?

JP Morgan Fleeces Alabama Hicks With "Shit Bonds," National Guard Called In - Alabama’s most populous county, Jefferson County, is so broke it’s closing down courthouses and laying off so many cops that it’s now planning to call in the National Guard to maintain order

Citigroup's Oil Trader's $100,000,000 Payday: A Wakeup Call for the Nation - What in the world is a bank doing in the oil-trading business?

Old Banks, New Lending Tricks - Lenders haven't sworn off risky financial products. They've come up with a slew of new ones.
How the Bank Lobby Beat Credit Card Reform

The debt-inflation myth, debunked by UBS - refutes the idea that governments can inflate their way out of debt...historically, OECD government debt actually rises as inflation rises...

The price is not always right - FT Op-Ed re: efficient market hypothesis

Have the Stimulus Programs Failed? - Brookings

GE ‘Buy American’ Water-Filter Shortage Strands Work - Bloomberg - GE makes them in Canada. Under the program’s ‘Buy American’ rules, that means the filters can’t be used for work paid for by the $787 billion fund. (projects delayed, layoffs)
Stimulus Around the World - study showing that countries that applied bigger stimulus packages have recovered more quickly...

Accelerating U.S. bank-failures refute “recovery” hype - already on course to exceed the number of failures in 2008 by 400%, the FDIC is seeing less bidders step up to bid on these companies. It's “insurance fund” will be nearly completely exhausted when the pending failure of Texas-based Guaranty Bank takes place...
The long recession: 15 reasons why the U.S. economy faces a weak recovery

Federal Tax Revenues – Cliff Diving and Data Hiding… - "Remember good economic data? You know, data that “is not statistically massaged before release...And how’s it looking? Is it down the .7 or even 5% that comes out of the massaged and adjusted data? NO! It’s down, wait for it, 22% year over year for Federal individual tax receipts and it’s down a horrific 57% for Corporate Income Taxes!"...What will that mean for our deficits? GAME OVER!"

Personal Income Drops, Personal Saving Rate Slides From 6.2% To 4.6%

Consumers Increase Spending Despite Lower Incomes - according to the most recent “Personal Income and Outlays Report” from the Bureau of Economic Analysis (BEA)

Gallup Daily: U.S. Consumer Spending

Prolonged Aid to Unemployed Is Running Out - Over the coming months, as many as 1.5 million jobless Americans will exhaust their unemployment insurance benefits, ending what for some has been a last bulwark against foreclosures and destitution...includes this state by state graphic

Income Loss Persists Long After Layoffs - NYTimes

Hunger hits Detroit's middle class - a delivery man stacks a dolly of goods outside a store. Ten feet away stands another man clad in military fatigues, combat boots and what appears to be a flak jacket. He looks straight out of Baghdad. But this isn't Iraq. It's southeast Detroit, and he's there to guard the groceries. US food stamp list tops 34 million for first time
For Many Americans, Nowhere to Go but Down - washingtonpost

Antidepressant use doubles in America increasing from 5.84 percent to 10.12 percent. That translates to a grand total of 27 million people.

California Won’t Accept Its Own IOUs - California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes.

The 'New Normal' for Unemployment - Seeking Alpha - "Who cares that the rate of claims is slowing? ...more than 600,000 claims were filed every week last month...the U.S. is likely entering a "new normal"...and we may never see 5%-6% unemployment again."

The steep rise in unemployment continues - Economic Policy Institute - table & charts - "While the current unemployment rate—9.5% in June—is not at an historical high, it has increased much more rapidly during this recession than in other post-war recessions."

Employment to Population Ratio (60 year graph)

Black States Krugman w/ BLS map -those swaths of states in black are where unemployment exceeds 10%

Unemployment Insurance and Unemployment - Paul Krugman calls out Casey Mulligan for “saying that unemployment is high not because employers have become less willing to hire, but because workers have become less willing to work.”

Changing the fortunes of America’s workforce: A human capital challenge - McKinsey Global Research Topic: Labor Markets and Offshoring, Global Economic Integration
Offshoring by US companies surges: Survey - Of the companies surveyed, 53 per cent had a corporate offshoring strategy in place, up from 22 per cent in 2005.

Manufacture or Borrow (Until We Can't) - Let's start with the most basic of basics in an economy: wealth comes from making things that you can trade with others.

American Incomes Head Down, Threatening Recovery in Spending - Bloomberg - Wages and salaries, which drive recoveries in spending, fell 4.7 percent in the 12 months through June, the biggest drop since records began in 1960..."Even if rebuilding goes on at a pretty good clip, it will take 12 or 15 years for households to get to the wealth level that they had several years ago"

The Great Recession and the coming jobless recovery - Economists Forum - "The next casualty of economics will be the natural rate hypothesis. It is the idea that unemployment has an inherent tendency to return to some special natural rate...a fact of nature, a bit like the gravitational constant"

Is a Jobless Recovery Your Best Friend? - analysis of how the Fed is likely to respond to the US economy:"The jobless recovery is what keeps the Fed goose laying the golden eggs."

Job Prospects: Wall Street and the Government Wall Street is hiring, and there are entry level positions for internment/resettlement specialists with the government.

"Breaking News: The Global Financial Crisis was not caused by Beer Swilling, Cocaine Snorting Traders" There may be inevitable boom-bust cycles that cannot be easily eliminated, as a whole generation of economist assumed. As Keynes observed “the difficulty lies not so much in developing new ideas as in escaping from old ones”.

What does a double dip recession look like? - Edward Harrison of Credit Writedowns
detailed analysis of what could cause it & comparison to 80-82 with supporting data...
Comparing the Current Recession and the "1980-82 Recession" - Econbrowser

Entering the Greatest Depression in History
The crisis has many bubbles, all of which dwarf the housing bubble burst of 2008. The main event on the horizon is the “bailout bubble” and the general world debt bubble.

It's Not a Recession ... Or a Depression "the use of either term is an implicit agreement that what we're experiencing now is can be measured in the same way we've measured all economic activity since 1929...there is no going back for us."

Biggest tax revenue drop since 1932 — The recession is starving the government of tax revenue. Tax receipts are on pace to drop 18 percent this year.

1929 All Over Again? (rally in S&P500 in lockstep with rally of 29-30) + analysis

this one looks like 2007 all over again: Investors Buying Low End Foreclosures and they expect to double their money in five years; California, of course...they're finding that inventory is limited because lenders are sitting on foreclosures. "Banks own 530 homes in this ZIP code (Pittsburg's 94565) but there are only 15 on the market..."

He's Back: PennyMac IPO brings back subprime memories (MW) another sign that fear is out, greed is back, and we have entered the new post-crisis era. Subprime Stan is back on Wall Street, after less than three years away.

Who’s Modifying Mortgages? according to data released by the Treasury Department on Tuesday, some big banks are moving much faster than others to modify mortgages (bar graph)

"Shadow" inventory lurks over U.S. housing recovery - "At this pace, it would take about four years to run through this amount of backlogged inventory"
Google Maps Shows Foreclosure Status - Calculated Risk

Mansions Go Under the Gavel - NYTimes

but CNN says "Buy foreclosures now - before it's too late"

Farmland Values Decline - not as severe as the bubble in the late '70s and early '80s that led to numerous farm foreclosures in the U.S.

Commercial property - A concrete problem (The Economist) Banks face another round of property-related bad debts: this time it will be flashy offices, not rundown homes

*FDIC Loan Report and Plan C: - Nearly Half of the $7.7 trillion in Loans Outstanding at FDIC Insured Banks are in the form of Commercial Real Estate. "the GDP release tells us that commercial real estate is on precipice of implosion. Is it any wonder that the U.S. Treasury is secretly working on a preemptive bailout program called Plan C gearing up taxpayers dollars for another toxic mortgage industry that has $3 trillion in loans?"

& here's a table showing the FDIC's remaining funds - about $800 million... and a Warning Related To The FDIC

Resource: Failed Bank List with Enforcement Documents - ProPublica has a great table of failed banks with sortable columns by state, date and Federal regulator.

Construction Loan Defaults Coming - “construction loans will be the epicenter of bank loan problems”

The Fair Mortgage Collaborative ? - The Big Picture - watchdog group "looks like a group of concerned foxes volunteering to watch the hen house"

Alt-A Loans and Pesky Resistant Subprime Loans: The Lingering Mortgage Beast. $1.1 Trillion in Active Toxic Waste Mortgages. PennyMac Ready for Toxic Mortgages. What Happened to the Public-Private Investment Program? "One thing the happy cheerleaders in the financial circuit fail to have is basic logic."

US prime borrowers fall behind on payments
The dollar volume of prime mortgages in delinquency or default rose 13.8 per cent between March and June, according to a study of private-label prime, subprime and Alt-A home loans conducted by S&P.

‘Underwater’ Mortgages to Hit 48% - (Bloomberg) -- Almost half of U.S. homeowners with a mortgage are likely to owe more than their properties are worth before the housing recession ends, Deutsche Bank AG said. “Borrowers may also ‘ruthlessly’ or strategically default..." ; & here's a similar story from Reuters...

Not Home Yet; Foreclosures and the continuing crisis - The New Yorker

Out of the Frying Pan One of the more interesting questions about the Housing Bubble Era of 2001-2008 actually has to do with what happened in the years before its rise.

economic indicator: the hot waitress index.

The New Financial Media CNBC takes on the bloggers...

if you've got a lot of free time to read it, here's the 1017 page pdf of the healthcare bill that passed the house energy & commerce committee this week; if you dont, heres a list of several dozen low points that looks like it was put together by opponents of the bill

CBO: The Effects of Health Reform Legislation beyond the Next Decade

A Canadian doctor diagnoses U.S. healthcare - The caricature of 'socialized medicine' is used by corporate interests to confuse Americans and maintain their bottom lines instead of patients' health. Canada spends 10% of its economy on healthcare; the U.S. spends 16%. Even the U.S. Medicare program has 80% to 90% lower administrative costs than private Medicare Advantage policies.

Meds To Cut British Medical Journal’s Clinical Evidence summarizes 2500 treatments studied.(pie chart: levels of ineffectiveness)

Obesity and Healthcare Costs - The prevalence of obesity rose 37% between 1998 and 2006....Obese people spent 42% more than people of normal weight on medical costs in 2006.
Poll: Most Americans don't think they have a weight problem

Insurers only pull your coverage when it hurts
- only "a small fraction of the insured experience a large share of medical expenses — and you can bet that rescissions are concentrated on the people with big medical bills"

You Do Not Have Health Insurance - you can’t count on your health insurer being there when you need it. That’s not insurance; that’s employer-subsidized health care for the duration of your employment (if they don't drop it)

‘Why do we even need the insurance companies?’ Rep. Anthony Weiner (D-NY) introduced an amendment Thursday night that would have repealed medicare, thereby forcing Republicans to show their support for the largest form of government-run healthcare in the U.S.

"The Health Insurers Have Already Won" - Yves Smith - with the Obama cohort, the focus is Orwellian, the use of language to misrepresent substance...a similar charade is in motion on the health care front...

also: Has the White House Given the Health-Care Industry Immunity?

GOP Health Plan Is Modeled on Banking Deregulation Apparently incapable of coming up with a single new idea, House Republicans plan to release a health plan which is plagiarized almost entirely from the McCain-Palin health plan... the “new” GOP plan even lifts McCain’s widely-panned proposal to deregulate the health insurance industry in exactly the same way the banking industry was deregulated over the last several decades.

Filibuster Nation - "The best may or may not lack all conviction, but the worst are sure as hell full of passionate intensity." The activists who have been whipped into a frenzy, stormed a number of such meetings across the country, shouting down members of the House, and who have dominated the recess meetings so far, appear to be conservative whites." The Town Hall Mob Paul Krugman

Barack Obama vs. Drudge Report - includes White House video countered by Health Care Opponents Make Up Supreme Court Case To Attack Obama

Obama gives powerful drug lobby a seat at healthcare table "As a candidate for president, Barack Obama lambasted drug companies and even ran a television ad targeting the industry's chief lobbyist, former Louisiana congressman Billy Tauzin for preventing Medicare from negotiating for lower drug prices. Since the election, Tauzin has morphed into the president's partner... he eventually secured an agreement that the administration wouldn't try to overturn the very Medicare drug policy that Obama had criticized on the campaign trail." >>>later: White House Affirms Deal on Drug Cost - NYTimes - White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them...

Silbey on the New York Times: Epics of Cluelessness

The Prez, The Press, The Pressure - as the networks weighed whether to give up a chunk of their precious prime time, Rahm Emanuel phoned Bob Iger, chief executive of parent company Disney. Instead of contacting NBC, Emanuel went to Jeffrey Immelt, the chief executive of General Electric. He also spoke with Les Moonves, the chief executive of CBS, the company spun off from Viacom...

House GOP: ‘Cash For Clunkers’ Is Wildly Popular, Proving That Government ‘Can’t Run’ Programs "If we can’t handle something as simple as this, how would we handle health care?”

Cash for Clunkers-By Math Class Flunkers - "The government wasn’t happy with winning only the Daily Double of Stupidity, they knew they could take home the Trifecta of Sheer Idiocy. So, they created a program that would succeed in spending as much as just a scosh over $45,000 on each clunker…"

Nissan: Demand Will Fall Off A Cliff After 'Clunkers' Runs Out

Cash for Clunkers cars list: Top 10

Carbon for Clunkers - How much will the popular trade-in program really do for the environment? After all, those new, energy-efficient cars aren't going to just drop out of the sky, fully assembled...and those new cars are produced in plants that are the largest consumers of coal generated electricity in the region...

German car scrap scheme ‘abused’ – BBC - Up to 50,000 cars meant to be scrapped under a German scrappage scheme have been illegally sold abroad instead...

Coming soon to the UK: negative interest rates? - Telegraph - for the first time in history, there is more money parked at the Bank of England in high street bank’s reserve accounts than there is flowing around the country in the form of notes and cash.. a lot more

Bank of England surprises markets with move to increase ‘printing money’ plan – Telegraph

Bank of Japan to forecast 3 years of deflation extending to March 2012

Dubai Leads World in Price Declines (real estate)

Banana Republic Watch: Credit Default Swaps on Russia Cheaper Than on California - From Bloomberg - Investor demand for emerging-market bonds is driving the cost of insuring against debt defaults below industrialized governments for the first time. Credit-default swap prices from Turkey to Indonesia are falling as bonds rise amid signs that their economies are recovering faster than developed nations...BRIC countries now have $3 trillion in reserves, 43 percent of the worldwide total...

U.S., in Nod to China, to Sell More TIPS (WSJ)

The U.S. Trade Deficit with China & the Exchange Rate - 83% of the U.S. non-oil trade deficit is with China...

Internet activism in China - reviewing Guobin Yang's The Power of the Internet in China: Citizen Activism Online - with 253 million netizens, the internet functions as a location of social activism in China, the book gives a snap review of some of the hottest issues in front of the Chinese public today -- environmental problems, corruption, exploitation of factory workers, abuse of power, and social inequalities.

Chinese survey finds prostitutes more trusted than officials

Andy Xie Calls Chinese Stock Markets a Bubble

China, new financial superpower … (council on foreign relations)

China's Impact on the Global Economy: A Symposium - selected highlights

China’s Coal Power Sector: Larger, But Also More Efficient - China’s energy sector gets a bad rap because of its heavy reliance on coal, and continuing to expand coal power capacity at a rate of two coal power plants a week...but the plants that China is currently building are some of the most efficient in the industry...

GERMANY: Nuclear Power Fails, And Nobody Notices - Seven German nuclear plants have failed to generate any electricity this month due to technical breakdowns. They have about half the production capacity of Germany's 17 nuclear reactors...

Warning: Oil supplies are running out fast - The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak productionsaid Dr Fatih Birol, the chief economist at the respected International Energy Agency (IEA) in Paris, which is charged with the task of assessing future energy supplies by OECD countries

US Dept of Defense - Navy Task Force Assesses Changing Climate - Rapidly diminishing sea ice, melting glaciers, rising sea levels, increased storm severity -- all are possible consequences of a climate that mounting evidence suggests is changing significantly.

Plan urged to save national parks from global warming effects - Climate change could result in the catastrophic loss of wildlife, the report from the National Parks Conservation Assn. says

New El Niño threatens world with weather woe
Forecasters say this one is brewing up to be the second-strongest on record.
See also: Effects of the El Niño-Southern Oscillation in the United States

US Manufacturing: Guns R Us? - Yves Smith - durable goods table & chart - "After all, with 4% of the world’s people why shouldn’t we spend 45% of the world’s military spending?"

Global Defense Spending Map - a Visual Economics depiction of world defense spending, that combines both percent-of-GDP spent with a pie chart to illustrate overall spending.

CTV: Test of U.S. missile defence shield fails

DefCon: ‘Credit Hackers’ Win the Credit Card Game … Legally - Hundreds of “credit hackers” are legally gaming financial institutions by taking advantage of loopholes in the U.S. credit-reporting system.

Small Beer, Big Hangover - "Some whites habituated to a monopoly on the upper reaches of American power just can’t adjust to the reality that Obama, Sotomayor, Oprah Winfrey and countless others are now at the very pinnacle" (NYTimes article that contains dozens of links)
Matthew Yglesias » Majority of White Southerners Doubt Obama’s US Birth

Why Would Information Blockades Increase Newspaper Revenue?

The next food crisis - voxeu - The food crisis caught some policymakers off guard. Will they be ready next time?

Michael Farrell, Chairman of Annaly, delivered these opening remarks to the Company’s second quarter earnings call: Sherlock Holmes and the Mystery of the Green Shoots

The Bobblespeak Translations: Meet The Press - Larry Summers, August 2, 2009

Sunday Funnies - Economic Edge blog

interesting interactive graphic on how people spend their time. hour by hour, in U.S....why does it not surprise me that TVtime is almost as much as work? (link to article)

The truth about grit - Modern science builds the case for an old-fashioned virtue - and uncovers new secrets to success...

Grit Study - Penn State; Participating in this study entails answering three brief questionnaires (about 10 minutes total). The purpose of the study is to learn how grit relates to other personality traits.

How Is America Going To End? - Slate's "Choose Your Own Apocalypse" lets you map out the death of the United States.

The sixth extinction: the Holocene Extinction Event is the widespread, ongoing mass extinction of species during the present epoch... paleontologists are exempt from hope... Extinction hits 'whole families' - BBC

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