Tuesday, October 16, 2012

Today's links

1--Sorry, U.S. Recoveries Really Aren’t Different, Bloomberg

2--US Households Are Not "Deleveraging" - They Are Simply Defaulting In Bulk, zero hedge

3-- Market Thoughts From David Rosenberg,  zero hedge

....this is the first time the Fed embarked on a nonconventional easing initiative with the market overbought and with profits and earning expectations on a discernible downtrend. The flattening in the core producer prices in August and the -0.1% reading in capital goods prices attests to the exceedingly challenging top-line environment

Not only that, but the fact the pace of U.S. economic activity is still running below a 2% annual rate, which is less than half of what is normal at this stage of the business cycle with the massive amount of government stimulus, is truly remarkable. Not just zero percent rates for four years and a tripling of the Fed balance sheet but yet another year of trillion-dollar-plus fiscal deficits.

4--Obama and His Silent Base, counterpunch

One cannot understand Obama without Clinton–as, not merely background, but a straight line projection, in which Obama took over much of the Clinton team and all of the free-market ideology focused specifically as the starting point on deregulation. This was not known to Obama’s base, his fervent supporters in the 2008 campaign (for whom I was one–one who participated in the civil-rights struggle in the late 50s and through the 60s, now elated at the election of a black president who talked the language of social justice). I was from practically Day One quickly disabused–with the appointment of Geithner and Summers. As the rhetoric soared, the policies plummeted. Few saw this happening as it occurred, and his base remains in a state of profound denial, giving false consciousness an exponential boost that neither Marx nor Marcuse could perhaps imagine. The Nobel Prize for Peace for waging war. The New START treaty on nuclear weapons reduction for actually ordering a new round of weapons development under the euphemism of modernization. A constitutional law teaching position, for perhaps the greatest setback to civil liberties since the Palmer Raids: the list is long, such as surveillance, made possible through advanced technology, as in the National Security Administration usage; reliance on the state-secrets doctrine to hide potential war crimes and place government completely out of reach as the National Security State; denial of the right of habeas corpus to detainees, and relatedly, the despicable doctrine of indefinite detention; employment of the Espionage Act against whistleblowers, thereby stifling dissent and criticism where and when they are most needed; and, under civil liberties, I would insist on including the drone attacks, in which the targets for assassination (personally authorized by Obama) are hardly given the right of counsel, a fair trial, or even proper identification. How his base can condone the drone, making them complicit in its hideous use, speaks volumes about the moral bankruptcy of modern liberalism.

Cornel West is wrong, I think. Obama is not the “black mascot of Wall Street,” but something far worse–not a symbolic figure to bring the Street good luck, but a heart-and-soul activist, or what we once called “a true believer,” who consciously tailors policies to the interests of upper economic groups–frequently through omission, the absence of genuine banking regulation, as well as commission, as in favoritism to the oil companies, nuclear power industry, defense contractors (already an unmistakable record of assistance to key sectors sufficient to validate capitalism as so top heavy that the tipping point to fascism is within reach or has been reached). This active strengthening of capitalism has its clear military and international-economic components. We are verily a Garrison State. Obama’s foreign policy would make another National Security Democrat’s mouth water: Dean Acheson. Obama is the next in a long line of Democrats anxious to burnish anticommunist credentials, under whatever name the current enemy may be labeled, a party mistakenly thinking itself and viewed by others as to the Left and for that reason wanting to prove to the world its superpatriotism, manifested largely in military prowess and huge defense budgets. Naval power, as in the Mediterranean and the South China Sea, is “in,” as is support of dictators (Honduras) and opposition to popular governments (Venezuela) in seeking to remain dominant in Latin America. Most Important, Obama is positioning foreign policy, his Pacific-first strategy, with respect to the encirclement and/or containment of China.

To all of the foregoing, his base is silent as the tomb. In contrast to the New Deal, there is very little opposition in the street. The Flint Sit-down strike of 1937 might as well have been at the time of the Roman Empire. The ACLU, despite its good intentions, has not taken on Obama and DOJ. The Occupy Movement in what seems to me its nebulous posture has not confronted Obama directly and by name. In other words, the negative dialectic is alive and well, each Obama betrayal met by like passivity in the base, thus giving him reason to think he can get away with more. At the moment, he might be right.

5--Prices up, sales down. Go figure? California home sales dipped 16.5% last month, Housingwire

San Diego-based DataQuick announced that an estimated 34,453 new and resale homes and condos sold statewide last month, which was down 16.5% from 41,280 in August, and down 2.7% from 35,404 sales in September of 2011. ...
The median price paid for a house in California last month was $287,000, which went up 2.1% from $281,000 in August, and up 15.3% from $249,000 from September 2011. Last month’s median was the highest since 2008, where it was at $301,000. ...
Of the existing homes sold in September, 17.7% are recently foreclosed homes. That is down from 20% in August and down 33.8% from a year earlier.

6--Recent nominal and real wage growth (grim), Jared Bernstein chart

7--The Recovery and Monetary Policy, William Dudley, NY Fed

8--Deleveraging slowing household spending? No way, says researcher, WSJ

It’s a common-enough assertion — U.S. consumer spending has been held back by deleveraging in the wake of the recession.  It makes some sense, except for one problem — it’s wrong.
That’s according to Daniel Cooper, a Boston Fed economist. “Overall, the data show little evidence that deleveraging affected household consumption. Rather, movements in consumption prior to, during, and following the Great Recession are consistent with the standard relationships implied by fluctuations in
household income and net worth,” he said in a study. Read study here.
In fact, Cooper finds the opposite: “there is evidence that suggests that households potentially under spent relative to income and net worth during the housing boom and have over spent since the recession began.”

9--On the long-lasting hit to UK productivity, ft.com

10--Housing recovery in perspective (pathetic), wonkwire

11--Ground under unit 4 Fukushima is sinking, you tube

12--The "real" story on deleveraging, naked capitalism

the economy bulls are leaving something very significant out: defaults. The data is pretty clear. In the latest quarter, first and second lien charge-offs were $303.7 billion (with Home Equity Lines of Credit defaults high and continuing to rise). Meanwhile, aggregate consumer debt dropped by $53 billion. That’s better than 2012 Q1, but the drop in debt from defaults is six times larger than the total drop in debt.
Consumers aren’t paying down their debts, they are simply defaulting. And here’s another way to look at the problem. One in seven Americans is being pursued by a debt collector. And the average amount of that debt pursued has increased by about 8% in just six months.

13--"Judicial" vs "non judicial", naked capitalism

Where once we pretended there was an imaginary non-problem – a massive housing bubble – now the same people are pretending there is an imaginary problem, judicial foreclosure. Fiction trumping fact, a common theme since the beginning of the bubble, remains alive and well.

comment Yves Smith 
1. The reckless borrower meme is a canard and I’m frankly offended to see you running it. Go read Two Income Trap and see why housing got bid up. The people who did buy too much house for the most part defaulted early. A surprisingly high percentage of defaults are SERVICER INDUCED. Most of the people who’ve defaulted in the 2009 period onward are victims of the banks blowing up the economy, or traditional causes of default: medical emergencies and divorce.
2. Borrowers are always overly optimistic (optimism is a well documented cognitive bias), and a few are outright crooks. That is true in every type of lending. That is why the onus is on LENDERS to be conservative. I have no sympathy for lenders who did a bad job blaming borrowers. They were derelict in duty.
3. The servicers have run roughshod over the rule of law, abusing both homeowners and investors. I can pull an investor report on a mortgage securitization, any one, and show you mulitple examples of servicers cheating investors. They do the same to borrowers, particularly in the foreclosure process

14--CFPB Considers Giving Fraud Immunization to Mortgage Lenders, Firedog Lake

15--Banks Trying to Grow Releases on Fraud-Related Settlements After the Fact, FD

The ACLU’s calss action lawsuit against Morgan Stanley over racial discrimination in lending is out. Five African-American homeowners from Detroit form the core of the plaintiffs, who allege that Morgan Stanley pushed the now-defunct New Century Financial into providing them with a “steady stream of irresponsible, high-risk loans issued in communities of color that were particularly vulnerable to economic ruin,” which Morgan Stanley could then package into securities and sell around the world. In so doing, New Century Financial violated fair lending practices by steering the borrowers into high-risk subprime loans; the ACLU and the plaintiffs seek to hold the securitizer responsible for the sins of the originator. The National Consumer Law Center is also a party to the case.

16--US intelligence admits Syria arms aid goes to Al Qaeda, WSWS

 American Intelligence officials are acknowledging that the bulk of the weapons flowing into Syria for the US-backed war to topple the regime of Bashar al-Assad are going into the hands of Al Qaeda and like-minded Islamist militias.

A lead article appearing in the New York Times Monday confirms the mounting reports from the region that jihadist elements are playing an increasingly prominent role in what has become a sectarian civil war in Syria.

“Most of the arms shipped at the behest of Saudi Arabia and Qatar to supply Syrian rebel groups fighting the government of Bashar al-Assad are going to hard-line Islamic jihadists, and not the more secular opposition groups that the West wants to bolster, according to American officials and Middle Eastern diplomats,” the Times reports

17--Fed's Beige Book, text, Bloomberg

Overall loan demand was steady to stronger in most Districts. Credit standards were little changed since the last report, and a number of Districts noted improvements in loan quality or steady to declining delinquency rates. .... ...

Consumer spending was mixed but generally reported to be flat to up slightly over the latest reporting period. Retail sales were said to have improved modestly in the Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco Districts, while sales were characterized as flat to softer in the New York and Kansas City Districts. In general, retail sales were reported to be running only modestly ahead of a year ago


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