China is an extreme bubble fueled by artificially low wages and an autocratic industrial policy that is distorting the economy of the entire world.
The monied interests of the West have been riding the trend of deregulation and globalization to their personal enrichment and benefit. But it is an empire of illusion, with a foundation of sand, held in place by the corrupting power of money.
While easy credit is still a long way off as lenders begin to loosen from very high standards, the share of loans originated for borrowers with the highest credit score remain large, averaging 82% in the last two years compared with 50% in 2005 and 2006, the credit rating agency stated.
"Although mortgage supply will remain constrained, improved consumer credit quality combined with steady growth in jobs, low mortgage interest rates and modestly rising house prices makes it clear that more households will be able to qualify for a mortgage," Moody's said.
"Greater credit availability will in turn help drive stronger home sales and stronger price appreciation and help keep the housing market and the larger economy on an upward path."
5---Why Politicians Ignore Economists on Austerity', economists view
Why do politicians ignore economists? It's a chance to implement ideological goals. Make an argument that sounds good -- if we don't get the debt under control bad things will happen! -- and use it to argue for spending cuts, smaller government, and ultimately lower taxes on wealthy contributors to reelection campaigns.
In good times or bad, conservatives will find a way to argue that tax cuts for the wealthy are the key to economic success
6--Student loan snapshots, conversable economist
The total value of outstanding student loans has nearly tripled in the last eight years--and 17% that total value is owed by people over the age of 50. These and more disturbing facts are apparent from a presentation by Donghoon Lee of the New York Federal Reserve on "Household Debt and Credit: Student Debt," given last week as part of the quarterly release of data on overall household debt and credit trends.
Start with the big picture. Total student debt outstanding has risen from about $350 billion in 2004 to $950 billion by fourth quarter 2012. One-third of that debt is owed by people over the age of 40, and shockingly, at least to me, 5% is owed by people over the age of 60.
Perhaps not surprisingly, given these borrowing trends combined with poor job prospects and continued high unemployment, the rate of delinquencies on loans is up. This is measured in two ways. Some borrowers are not yet "in repayment," because they are able to defer their loan for some reason--like they have continued on to another degree. The figures on the right don't count the loan as delinquent if you aren't yet "in repayment." But for those in repayment, on the right, about one-third of all borrowers are more than 90 days delinquent on their payments, compared with one-fifth back in 2004
7--Bubble trouble, Bernanke vs Stein, economists view
8----Recovery in U.S. Is Lifting Profits, but Not Adding Jobs, NYT
With the Dow Jones industrial average flirting with a record high, the split between American workers and the companies that employ them is widening and could worsen in the next few months as federal budget cuts take hold
That gulf helps explain why stock markets are thriving even as the economy is barely growing and unemployment remains stubbornly high.
With millions still out of work, companies face little pressure to raise salaries, while productivity gains allow them to increase sales without adding workers.
“So far in this recovery, corporations have captured an unusually high share of the income gains,” said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch. “The U.S. corporate sector is in a lot better health than the overall economy. And until we get a full recovery in the labor market, this will persist.”
The result has been a golden age for corporate profits, especially among multinational giants that are also benefiting from faster growth in emerging economies like China and India.
These factors, along with the Federal Reserve’s efforts to keep interest rates ultralow and encourage investors to put more money into riskier assets, prompted traders to send the Dow past 14,000 to within 75 points of a record high last week.
9----Low housing inventory is an indicator of residual mortgage distress, oc housing
The national numbers show a similar result. A baseline for comparison can be constructed if you project the line from 2000 through 2005. Based on that projection, we should have about 3,000,000 homes for sale nationally. Currently, there are about 1,750,000. That strongly suggests that about 40% of those who would ordinarily be selling are not because they are either squatting in their properties or hopelessly underwater. Some might argue that discretionary sellers are also withholding their properties because prices are rising, but that isn’t supported by data from the past
10---Los Angeles County has 12,700 distressed properties with loan-to-value ratios greater than 100 percent. How many homes are for sale on the MLS? 13,900., Dr Housing Bubble
We went ahead and searched for properties where LTV is higher than 100 percent and that were in some stage of foreclosure (i.e., NOD, auction schedule, bank owned). For Los Angeles County 12,700 properties hit this criteria. Is this a lot? Given that the MLS only has 13,900 homes listed for Los Angeles County, this is a massive number and keep in mind this data is up to date and factors in the boom of the last year where property values have surged.
Based on the last month of sales data for Los Angeles, there is only 2.6 months of inventory. That is incredibly low. Normal markets typically carry 6 months of available inventory. Yet we have discussed the trend of the last two years where available inventory for sales has virtually disappeared. The fact that many are still underwater even in SoCal where many properties are selling at or above their peak bubble prices demonstrates the kind of leverage people took on
11---Brutal budget cutting, privatization planned for Detroit, wsws
On March 1, Michigan’s governor, Republican Rick Snyder, declared Detroit to be in a state of financial emergency, paving the way for the appointment of an emergency manager who would have dictatorial powers to abrogate labor agreements, gut city services and sell off public assets.
In justifying his decision, the multi-millionaire former venture capitalist and computer mogul said city officials had refused to seriously address the financial crisis.
In fact, Detroit’s Democratic mayor and City Council have been engaged in non-stop budget cutting. But clearly this is not enough for the banks and wealthy bondholders seeking to loot the city, channel public resources to private companies and strip workers of their jobs, wages and pensions.
Snyder cited the findings of the Finance Review Team, a bi-partisan body set up in April to oversee the city’s finances, which concluded that Detroit was unable to meet its debt obligations of $327 million and long-term liabilities of $15 billion.
“The Consent agreement”—the measure established in April 2012 in which the city agreed to partner with a state appointed Financial Review Team to carry out cuts, “did not work,” said Snyder, who added, “They did not bring the urgency to the problem..
In a foretaste of what is being planned, the Detroit Free Press reported Sunday that Andy Dillon, the Democratic state treasurer who heads the Finance Review Team, has already singled out four areas to be removed from city control. He called for them to be either privatized or sold in what would be a fire sale for wealthy asset strippers.
Plans are already underway to place the lighting system under private control, but Dillon would like to see it sold entirely to a private company. Dillon also called for the Detroit Department of Transportation (DDOT), the public bus system, to be privatized. This would mean that hundreds of workers would lose their jobs, wages and benefits. DDOT is presently under supervision by a private company that has carried out massive cuts in routes.
Another area being proposed for privatization is trash collection, a division of the Department of Public Works (DPW). Again, long-term rights of workers will be destroyed. The article hails the trend of cities turning to private contractors who pay workers low wages.
Dillon has also called for the sale of the Detroit City Airport, an aging structure that has not been maintained for decades. The article did not mention the fact that the city plans to implement the restructuring and downsizing at the wastewater treatment plant, the largest single site treatment plant in the US.
The water department plans to start combining job classifications at the facility this month, as part of a five-year plan to eliminate 81 percent of all jobs. Sewerage workers carried out a strike last fall that was isolated and betrayed by the American Federation of State, County and Municipal Employees.
Republican state officials and many of Detroit’s Democratic politicians have tactical disagreements, including over whether to appoint an Emergency Financial Manager. But these are chiefly disputes over a division of the spoils.
Detroit officials, almost all of whom are part of the black corporate and political elite, are complaining about “outside control” of the city’s finances because they want to benefit from the carve up of the city and profits that will be made through privatization....
All agree Detroit workers should be made to pay for a crisis they did not create. In his remarks, Snyder said Detroit “was the most successful city in the United States for many years” and placed the “world on wheels.” It inexplicably “went from the top to the bottom over the last 50 or 60 years.”
In fact, the destruction of Detroit was a deliberate policy bound up with the ruling class’ offensive launched against workers in the 1970s and 1980s, and the transformation of the US economy from the leading manufacturing power to the center of financial speculation and parasitism.
12---Japanese PM prepares for war, wsws
Japanese Prime Minister Shinzo Abe’s appeal last week to the example of the Falklands war to justify his tough stance in the island dispute with China is a chilling warning that the fault lines of a new and terrible global conflict are being drawn in Asia.
Abe quoted former British prime minister Margaret Thatcher’s cynical rationale for declaring war on Argentina in 1982 that the “the rule of international law must triumph over the exertion of force.” She proceeded to send the British military into a bloody conflict that cost hundreds of lives on both sides in order to secure a tiny remnant of the British Empire in the South Atlantic.
Abe’s remark is an unmistakeable declaration that his government is prepared to go to war with China to defend its control over the group of uninhabited, rocky outcrops
13---Sequester cuts boost corporate assault on American workers, wsws
As former White House deputy chief of staff Nancy-Ann DeParle told the Wall Street Journal, “He [Obama] can’t let himself be held hostage to the sequester. Most people don’t even understand it.”
Many soon will. US states, which receive about one-third of their revenue from the federal government, stand to lose about $6 billion in federal money for K-12 education, Head Start and other programs.
Non-profits and other social organizations are preparing for worst-case scenarios in which they will see 5 to 8 percent cuts to programs servicing workers and the poor. More than 600,000 women, infants and children will be turned away from the WIC nutrition program by the end of the fiscal year.
The Department of Housing and Urban Development estimates that as a result of the sequester, 125,000 individuals and families are at risk of becoming homeless and the agency may be forced to remove an additional 100,000 formerly homeless people from shelters.
The 3.8 million long-term unemployed, whose ranks will grow under the impact of the cutbacks, will see their weekly benefits of $292 cut by about $32 as early as this month.