Wednesday, October 10, 2012

Today's links

1--When Will Washington Accept the New Reality?..Chavez and the New South America, counterpunch

Hugo Chávez was re-elected president of Venezuela on Sunday, by a margin of 11 percentage points. For most people who have heard or read about Chávez in the international media, this might be puzzling. Almost all of the news we hear about Venezuela is bad: Chávez is cantankerous and picks fights with the United States and sides with “enemies” such as Iran; he is a “dictator” or “strongman” who has squandered the nation’s oil wealth; the economy is plagued by shortages and is usually on the brink of collapse.
Then there is the other side of the story: since the Chávez government got control over the national oil industry, poverty has been cut by half and extreme poverty by 70 percent. College enrollment has more than doubled, millions of people have access to health care for the first time, and the number of people eligible for public pensions has quadrupled.

2--Spain: The balance sheets are beyond repair, credit writedowns

Construction equipment manufactured during the Spanish housing boom now lounges and pouts, or jets to countries where housing bubbles still offer a thrill. For the connoisseur of booms-and-busts, Berlin, Oslo, and Hong Kong may be peaking. None are likely to match the sheer weight the defunct construction industry loads on the Spanish economy. Bloomberg described its proportions: “The property bonanza that ended in 2008 has left around 2 million unsold homes in Spain, representing supply that will take a decade to absorb…. Spain’s construction and real estate industry, which represented 18 percent of gross domestic product before the financial crisis, now accounts for 11 percent and building permits plummeted 87 percent last year from the 2004 peak.” [That it has only shrunk from 18% to 11% means the state is spending madly to keep it, and the banks, operating. - FJS] “Work started on fewer than 4,500 houses in February this year, a 94 percent decline from the October 2006 peak.”
Towards the bottom of the article, a modern financing mechanism was advanced: “Almost half of Spain’s 67,000 developers are insolvent but not bankrupt after getting additional financing from banks, according to R.R. de Acuna & Asociados, a property consulting firm. Extending the lives of companies is becoming harder for banks after Prime Minister Mariano Rajoy’s government demanded they set more money aside to cover losses on real estate loans

3--What makes this economic recovery so difficult for the US consumer? sober look

Why is it that this economic recovery feels so sluggish to US consumers relative to previous recessions? One answer is that growth in disposable income has been horrible (chart below). It explains the relatively weak consumer sentiment and anemic growth in consumer spending....
 
That is why this sudden increase in food and fuel prices (chart below) is an unwelcome development. With low personal income growth, the US consumer is now far more sensitive to these shocks than during the previous recoveries.
 
4--Feds hit Wells Fargo with mortgage-fraud suit, LA Times
 
The U.S. attorney in Manhattan has accused Wells Fargo of defrauding a government-backed mortgage insurance program, in another major civil case brought in the wake of the housing bust and financial crisis.
The mortgage-fraud suit, filed by U.S. attorney Preet Bharara, seeks "hundreds of millions of dollars" in damages for claims the U.S. Department of Housing and Urban Development has paid for defaulted loans "wrongfully certified" by Wells Fargo.
The suit alleges the San Francisco banking giant falsely certified loans insured by the government's Federal Housing Administration.
 
5--US, Israel plan joint strikes on Iran, WSWS
 
6--Growing world slump overshadows IMF-World Bank meeting, WSWS
 
The processes of economic globalization which resulted from the subsequent deep recessions of 1974-75 and 1982-83 gave a boost to the world economy by providing access to cheap labour around the world, notably in East Asia and, particularly in later years, in China. But globalization did not signify a return to the conditions of the post-war boom. Rather the ever-increasing reliance on financialisation, especially in the US, created the conditions for the development of a series of financial bubbles, culminating in the financial collapse of 2008.
Now the world economy has entered its most serious crisis since the 1930s.
The 20,000 government leaders, IMF and World Bank officials, banking and corporate chiefs gathered in Tokyo have no program to promote “economic recovery.” There is no “reform” of capitalism waiting in the wings, if only governments had the wit and wisdom to introduce it.
But this is not to say that the ruling elites and their governments do not have a strategy. They do. All their policies are aimed at imposing the burdens of the historic crisis of the profit system on to the backs of the working class the world over. This is the meaning of their mantra of the need for “fiscal consolidation” and “structural economic reform”. Social spending must be slashed, all the gains made by the working class in the post-war period destroyed, and wages and working conditions attacked in order to intensify exploitation
 
7--The Pheonix miracle?, cal risk
 
The Arizona Regional MLS reported that residential home sales by realtors in the Greater Phoenix, Arizona area totaled 6,478 in September, down 17.9% from last September’s pace. REO properties were just 12.9% (835) of last month’s sales, down from 37.1% (2,931) last September, while last month’s short-sales share was 27.0%, unchanged from a year ago. Active listings in September totaled 22,862, up 9.2% from August but down 15.2% from a year ago. The median home sales price last month was $150,000, up 30.5% from last September. Citing data from the Cromford Report, the ARMLS also reported that foreclosures pending in Maricopa County totaled 14,584 in September, down 38.1% from a year ago 
 
8--"Faith" in housing on the upswing, cal risk
 
“Consumers are showing increasing faith in the nascent housing recovery,” said Doug Duncan, senior vice president and chief economist of Fannie Mae. “Home price change expectations have remained positive for 11 straight months, and the share expecting home price declines has stabilized at a survey low of only 11 percent. Furthermore, the Federal Reserve’s latest round of quantitative easing has caused a large drop in mortgage rate expectations. Friday's September jobs report, including the strong upward revisions for prior months, a sizable increase in earnings, and a sharp decline in the unemployment rate, should provide further impetus for improving consumer confidence in the housing market.”
9--Lawler: "Distressed" home sales shares in Reno, Vegas, and Phoenix, cal rsik
 
Foreclosure sales Las Vegas--sept, 2011-49.4%  sept, 2012--13.6%
                             Pheonix----sept, 2011- 37.1...   sept, 2012----12.9%
                             Reno--------sept, 2011-38.0%.  sept,  2012-  12%
 
10--Pew's religion survey reveals a secular shift away from the religious right, The Guardian
 
'One nation under God' reads the pledge of allegiance, yet new data reveal an America less fervent in faith than ever before
 
A new survey from the Pew Forum on Religion and Public Life, which confirms previously observed trends of Protestant decline, accompanied by a rise in religiously unaffiliated Americans, casts serious doubt on whether the self-styled church freedom warriors are fighting a politically popular battle. Among the survey's findings, two thirds of Americans (66%) believe churches shouldn't endorse candidates. And 54% say churches should stay out of political matters entirely. Even a majority (56%) of white evangelicals agreed that churches should not endorse candidates.
 
 
 
 
 
“Consumers are showing increasing faith in the nascent housing recovery,” said Doug Duncan, senior vice president and chief economist of Fannie Mae. “Home price change expectations have remained positive for 11 straight months, and the share expecting home price declines has stabilized at a survey low of only 11 percent....
 
The so-called "shadow inventory" of homes that either have seriously delinquent mortgages, are in the foreclosure process or are bank-owned but not yet listed for sale, fell to 2.3 million units in July according to CoreLogic. That's a 10 percent year-over-year drop, and puts the supply at about six months by the current sales pace.
"The decline in shadow inventory has recently moderated reflecting the lower outflow of distressed sales over the past year," said Mark Fleming, chief economist for CoreLogic. “While a lower outflow of distressed sales helps alleviate downward home price pressure, long foreclosure timelines in some parts of the country causes these pools of shadow inventory to remain in limbo for an extended period of time.” ...
 
Much of the latest optimism in housing is due to record low mortgage rates. The Federal Reserve's latest action to buy $40 billion in agency mortgage-backed securities sent rates plunging and mortgage applications rising.
The applications, however, were largely for refinances, not home purchases....
 
More recently, MBS yields have made up nearly all of their initial drop. If sustained, that suggests that mortgage rates may not fall much further, and could even rise," notes Paul Diggle of Capital Economics.
 
 
Assuming a fiscal retrenchment, balance-sheet-driven increases in consumption relative to GDP will have to carry a much larger share of the burden than they carried after WWII, if the economy is to grow. Assuming a decline in demand from the government sector (19.5% of GDP) as part of fiscal retrenchment and a decline in consumption demand (71+%) as a result of mean reversion and the fiscal retrenchment (higher taxes and lower transfer payments), then GDP growth will depend upon the remaining components of demand (9.5%) growing quickly enough to more than offset the decline in demand by the household and government sectors (90.5%).
To the extent that macroeconomic policies since 2007 have contributed to recent increases in economic activity and declines in unemployment by preventing the rehabilitation of the household sector’s balance sheet, they have done so at the expense of delaying the return to a self-sustained economic expansion. These policies may ultimately contribute to a Japan-like outcome for the US: years and years of slow growth with an economy dependent on larger budget deficits and continuous extraordinary monetary policy. The policies have not solved the macroeconomic economic problem facing the country, but rather postponed and perhaps increased the ultimate cost of the required adjustments.
Less formally, can monetary policy, which rebuilds the balance sheets of financial intermediaries at the expense of the balance sheets of households and other economic agents they intermediate between, really be the path to lasting recovery?
 
17--Paul Ryan's shadowy "Keynesian" past, De Long
 
18--U.S. attorney goes after Wells Fargo for FHA-backed mortgages, Housingwire
 
Bharaa claims Wells Fargo certified 100,000 retail loans as meeting HUD requirements for FHA insurance. Yet, the suit alleges Wells Fargo knew that underwriters failed to perform the proper due diligence or verify information that would better reflect whether borrowers could actually repay the loans.
 
19--First, just like the expansion of the government’s balance sheet became a permanent part of the political economy after the Great Depression, prag cap
 
..., so too out of this crisis, we suspect the central banks’ balance sheet will become a permanent or semi-permanent feature of the political economy post-Great Recession.
 
20-Small Business Hiring Plans Are Declining, prag cap
 
21--More on US-backed groups in Venezuela, global research
 
In “US Prepares for Overthrow of Venezuela,” US policy papers and US State Department National Endowment for Democracy (NED) funding was exposed as openly conspiring to meddle in and manipulate upcoming Venezuelan elections.
The opposition party which includes the defeated presidential contender, Henrique Capriles Radonski, called Primero Justicia (Justice First) was co-founded by Leopoldo Lopez and Julio Borges, who like Radonski, have been backed for nearly a decade by the US State Department. Primero Justicia and the network of foreign-funded NGOs that support it have been recipients of both direct and indirect foreign support for at least just as long.

22-- George Carlin describes "What our owners want" you tube via Burning Platform

“Politicians are put there to give you that idea that you have freedom of choice. You don’t. You have no choice. You have owners. They own you. They own everything. They own all the important land, they own and control the corporations, and they’ve long since bought and paid for the Senate, the Congress, the State Houses, and the City Halls. They’ve got the judges in their back pockets. And they own all the big media companies so they control just about all the news and information you get to hear.
 
They’ve got you by the balls.
 
They spend billions of dollars every year lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else. But I’ll tell you what they don’t want—they don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interest.”
 

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