Manufacturing activity slumped in November, shrinking for the first time since August. The Institute for Supply Management’s index of manufacturing fell to 49.5 from 51.7 in October, the lowest level since July 2009. Readings below 50 indicate contraction. The ISM’s measure of factory employment contracted for the first time in more than three years, suggesting that businesses are putting off hiring.

10--Why Banks Are Enjoying Record Mortgage Revenue, WSJ

11----Treasury Scarcity to Grow as Fed Buys 90% of New Bonds, Bloomberg

Even as U.S. government debt swells to more than $16 trillion, Treasuries and other dollar fixed-income securities will be in short supply next year as the Federal Reserve soaks up almost all the net new bonds.
The government will reduce net sales by $250 billion from the $1.2 trillion of bills, notes and bonds issued in fiscal 2012 ended Sept. 30, a survey of 18 primary dealers found. At the same time, the Fed, in its efforts to boost growth, will add about $45 billion of Treasuries a month to the $40 billion in mortgage debt it’s purchasing, effectively absorbing about 90 percent of net new dollar-denominated fixed-income assets, according to JPMorgan Chase & Co.

Even after U.S. public borrowings outstanding grew from less than $9 trillion in 2007 as the U.S. raised cash to pay for spending programs designed to pull the economy out of the worst financial crisis since the Great Depression, rising demand coupled with a drop in net supply means bonds will be scarce.
“The shrinking amount of bonds in the market is lowering rates and not just benefiting the Treasury, but providing lower rates for private-sector decision-makers as well,” Zach Pandl, a senior interest-rate strategist in Minneapolis at Columbia Management Investment Advisers LLC, which oversees $340 billion, said in a Nov. 30 telephone interview. “The Fed is not creating this scarcity to help out the Treasury, it’s primarily to get the economy going.”...

Bank Deposits

Deposits at U.S. banks exceed loans by $1.91 trillion, marking a turnaround from 2008, when loans exceeded deposits by about $200 billion. Much of that surplus money has been used to buy Treasuries and government agency debt such as that issued byFannie Mae, Freddie Mac, boosting holdings to a record $1.86 trillion, Fed data show. Bank holdings of Treasuries increased 15 percent to $531.7 billion in the past year.

Consumers are also benefiting. The average interest rate on30-year mortgages is a record low 3.31 percent, according to a weekly survey conducted by Freddie Mac. Banks reported the most common rate for a 48-month new-car loan was 4.88 percent in August, the most recent reporting period. The rates were more than 7 percent in December 2008.
The Fed has pumped money into the financial system by purchasing more than $2.3 trillion of Treasuries and mortgage-related securities in three rounds of policy called quantitative easing. The latest program announced Sept. 13 involves buying $40 billion a month in mortgage securities, and has no end date or fixed total amount.

12---Quote:  Those who manipulate the unseen mechanism of society constitute an invisible government which is the true ruling power of our country. We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. In almost every act of our lives whether in the sphere of politics or business in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons who understand the mental processes and social patterns of the masses. It is they who pull the wires that control the public mind.” – Edward Bernays – Propaganda

13---Fed holds lenders' feet to the fire on mortgages, Reuters

14--Dealer MBS positions hit record levels; Volcker Rule creates market distortions, sober look
 
Primary dealer holdings of mortgage-backed securities was at an all-time high last week, as the dealers take advantage of the Fed's MBS purchases. Because of the public's push for increased transparency from the Fed, it is generally not that difficult to determine which securities the Fed will be buying (see discussion). And that means easy pickings for the dealers who "front run" the central bank
 
15---Dealer MBS positions hit record levels, sober look
 
16---Obama and al Qaida, WSWS
 
If the American public is experiencing an unsettling feeling of deja vu, it is for good reason. For the second time in a decade, Washington is threatening to launch an unprovoked war in the Middle East on the grounds of phony “intelligence” concerning “weapons of mass destruction.”
There is, however, one highly significant difference between how this narrative is being laid out by the Obama administration and the way it was presented under George W. Bush. The lies used to justify the war against Iraq included claims not only about non-existent Iraqi WMD, but also about a supposed threat that these weapons would be placed in the hands of Al Qaeda terrorists, resulting in new attacks on the scale of 9/11. The Obama administration makes no mention of any such Al Qaeda threat.

What makes this so extraordinary is that, while the allegations of an Al Qaeda presence in Iraq were a complete fabrication, it has become clear that Al Qaeda-connected groups and foreign fighters are playing a decisive role in the Syrian events.
David Ignatius, the Washington Post foreign policy columnist, wrote Monday that Jabhat al-Nusra, an Islamist militia with ties to Al Qaeda, now has as many as 10,000 fighters on the ground in Syria and constitutes “the most aggressive and successful arm of the rebel force.”

Similarly, David Enders of McClatchy Newspapers, reporting from Syria, wrote that Jabhat al-Nusra “has become essential to the frontline operations of rebels fighting to topple Assad.”
“Not only does the group still conduct suicide bombings that have killed hundreds, but they’ve proved to be critical to the rebels’ military advance,” Enders continued. “In battle after battle across the country, Nusra and similar groups do the heaviest frontline fighting.”
These Al Qaeda-connected forces have in recent weeks overrun Syrian military bases, executing unarmed conscript soldiers taken prisoner. The danger that they could gain access to chemical weapons is very real.

If the Obama administration is silent on this score, it is because the Al Qaeda forces inside Syria are acting as US proxies in the war for regime-change. They have been armed to the teeth by the CIA and Washington’s Arab allies, particularly Qatar and Saudi Arabia, and unleashed in a brutal sectarian civil war aimed at destroying the country and creating the conditions for the imposition of a US puppet regime.

17---Bottom Line: The Fed is gearing up to convert Operation Twist to an outright purchase program. A complete conversion should be considered a more aggressive policy stance. If the Fed wants to hold policy constant, then we would expect a less than one-for-one conversion. There are reasons to expect the Fed would go the full monty. Notably, the fiscal cliff drama already appears to be affecting the economy, even though it is more risk than reality. But why are inflation expectations sliding? And what does that imply about the effectiveness of additional easing at this juncture? Important but as of yet unanswered questions

18--Barack Obama update, antiwar

...you were a community organizer and a constitutional law professor and now, if you stop to think about it, here’s where you’ve ended up: you’re using robots to assassinate people you personally pick as targets. You’ve overseen and escalated off-the-books robot air wars in Pakistan, Somalia, and Yemen, and are evidently considering expanding them to Mali and maybe even Libya. You’ve employed what will someday be defined as a weapon of mass destruction, launching history’s first genuine cyberwar against a country that isn’t threatening to attack us. You’ve agreed to the surveillance of more Americansevery which way from Sunday than have ever been listened in on or (given emailing, texting, and tweeting) read. You came into office proclaiming a “sunshine” policy and yet your administration has classified more documents (92,064,862 in 2011) than any other in our history. Despite signing a Whistleblower Enhancement Protection Act, you’ve usedthe Espionage Act on more government whistleblowers and leakers than all previous administrations combined, and yet your officials continue to leak secret material they see as advantageous to the White House without fear of prosecution. Though you deep-sixedthe Bush administration name for it — “the Global War on Terror”(ridding the world of GWOT, one of the worst acronyms ever) — you’ve accepted the idea that we are “at war” with terror and on a “global battlefield” which (see above) you’re actually expanding. You’re still keepinguncharged, untried prisoners of not-quite-war in an offshore military prison camp of injustice that, on the day you came into office, you promisedto close within a year. You’re overseeing planning that, according to recent reports, will continue the Afghan War in some form until at least 2017 or possibly well beyond. You preside over an administration that has encouraged the further militarization of the CIA (to which you appointedas director not a civilian but a four-star general you presumably wanted to tuck safely away during campaign season). You’ve overseen the further militarization of the State Department; you’ve encouraged a major expansion of the special operations forcesand its secret presidential army, the Joint Special Operations Command, cocooned inside the U.S. military/ You’ve overseen the further post-9/11 expansion of an already staggeringnational security budget and the further growth of our labyrinthine“Intelligence Community” — and though who remembers anymore, you even won what must have been the first prospective Nobel Prize for Peace more or less before you did a damn thing, and then thanked the Nobel Committee with a full-throated defenseof the right of the U.S. to do what it pleased, militarily, on the planet! And if that isn’t a weird legacy-in-formation, what is?

19--Three-Card Budget Monte, Krugman, NYT