Sunday, March 3, 2013

Todays links

1---Incomes plummet to worst in 20 years, RT

Americans spent slightly more of their money in January than the month before, the latest Commerce Department report shows, but the rate of income growth hit a 20-year low.
Yes, it was a good month for the US economy in terms of pumping money away on utilities like gas and electric. The Commerce Department said on Friday that consumer spending increased 0.2 percent compared with December — on par more or less with what most economists had predicted — and largely due to a surge in demand for utilities during the winter months. But while that statistic is being touted as a signal of the strengthening economy, other indicators suggest things are not as sound as they may seem.
Personal incomes plummeted in January, the new report adds, with that month’s drop of 3.6 percent being the most significant downward change since January 1993 when Pres. Bill Clinton was just beginning his first term in office. Coupled with a slight surge in spending, the latest news means Americans are largely spending more money than before while saving less.

The news comes only days after a study released by the website found that barely half of Americans have more money in their savings account then they owe in credit card debt.

Yelena Shulyatyeva, an economist at BNP Paribas, New York, tells Reuters that this could be the start of something much more serious. "We expect a significant decrease in real consumer spending in the first half of the year," says Shulyatyeva. Additionally, the economist says this could mean some underwhelming news for the GDP this quarter.

Speaking to the Associated Press, BMO Capital Markets senior economist Jennifer Lee says that a slight hike in taxes starting on the first of the year is partially to blame for what could become a serious problem in the months to come. "The sting of higher taxes hit home at the start of the year. This will cool spending in the next few months before consumers adjust to higher rates."

James Marple, a senior economist at TD Economics, adds in a USA Today report that, given the latest changes in tax rates and spending cuts, growth during the first half of 2013 is unlikely to exceed a rate of 2 percent.

"At this pace, the unemployment will not improve and pressure will remain on the Federal Reserve to continue its asset purchase program,” Marple said.

2---The Business of the Minimum Wage, NYT

It is true, as conservative commentators often point out, that some minimum-wage workers are middle-class teenagers or secondary earners in fairly well-off households. But the available data suggest that roughly half the workers likely to be affected by the $9-an-hour level proposed by the president are in families earning less than $40,000 a year. So while raising the minimum wage from the current $7.25 an hour may not be particularly well targeted as an anti-poverty proposal, it’s not badly targeted, either.
A related issue is whether some low-income workers will lose their jobs when businesses have to pay a higher minimum wage. There’s been a tremendous amount of research on this topic, and the bulk of the empirical analysis finds that the overall adverse employment effects are small. ...
The economics of the minimum wage are complicated, and it’s far from obvious what an increase would accomplish. If a higher minimum wage were the only anti-poverty initiative available, I would support it. It helps some low-income workers, and the costs in terms of employment and inefficiency are likely small.
But we could do so much better if we were willing to spend some money. A more generous earned-income tax credit would provide more support for the working poor and would be pro-business at the same time. And pre-kindergarten education, which the president proposes to make universal, has been shown in rigorous studies to strengthen families and reduce poverty and crime. Why settle for half-measures when such truly first-rate policies are well understood and ready to go?
Post-election power broker also thinks the country will have to renegotiate on debt
In an interview with a German magazine, Beppe Grillo said “if conditions do not change” Italy “will want” to leave the euro and return to the Lire.

Mr Grillo’s Five Star Movement won more than a quarter of the vote in Italy’s general election last week, but he refuses to cut a deal with the centre-Left Democratic Party, which has slim control of the upper and lower houses of parliament but lacks a big enough majority to form a government.
The 64-year-old comic-turned-political activist also said Italy needs to renegotiate its €2 trillion debt, which at 127 per cent of GDP is the highest in the euro zone after Greece.

“Right now we are being crushed, not by the euro, but by our debt. When the interest payments reach €100 billion a year, we’re deadThere’s no alternative,” he told Focus, a weekly news magazine.
“In six months, we will no longer be able to pay pensions and the wages of public employees.”

4---Unemployment hits new record in euro zone, personal income plummets in US, wsws

Economic statistics released this week reflect a further weakening of the world economy and a further fall in the living standards of the international working class.

Reports on unemployment, manufacturing activity, economic growth and personal income in Europe, China and the United States point to an overall slowdown in economic growth and a rise in unemployment and poverty. They coincide with new moves by the European Union and the Obama administration in the US to slash social spending and public-sector jobs and wages. These measures mark an escalation of the class-war policies that have fueled the economic slump and already brought untold suffering to hundreds of millions of workers.

On Friday, the European Union statistics agency Eurostat reported that unemployment in the 17-nation euro zone hit a new record in January of 11.9 percent, up from 11.8 percent in December. For the 27-nation European Union as a whole, the official figure for January was 10.8 percent, up from 10.7 percent the previous month....

The most stunning indication of the depth of the social crisis was provided by a US Commerce Department report released Friday showing that personal income fell by 3.6 percent in January, the largest monthly drop since January of 1993. Taking taxes into account, personal income plunged by a record 4.0 percent. The report said that outlays for payrolls for manufacturing, goods producing industries, services producing industries and government agencies all declined in January from the previous month.
Another report, issued by the Labor Department’s Bureau of Labor Statistics on Tuesday, showed that layoffs by US manufacturers increased last month. There were 357 mass layoff events during the month, resulting in 43,068 initial jobless benefit claims, an increase of 22 percent from December

5---Wall Street's Brightest Minds Reveal The Charts That Worry Them Most, Bus Insider
6---Beppe Grillo Warns About Italy Leaving The Euro, Bus Insider

7---Greek military prepares for mass repression, wsws

Greek ruling circles are working on the assumption that insurrectionary struggles are inevitable because of the intolerable level of suffering they have imposed on the working class. Within less than four years, the social position of the Greek working class has been reduced to levels not seen since the Nazi occupation during World War II.

Brutal poverty is a fact of life for millions. One major aspect of the assault on living conditions is the removal of public health provisions.

More than 50 pharmaceutical conglomerates have either halted or savagely cut supplies to Greece—citing concerns for their profits. The dangerous shortage of hundreds of basic medicines is resulting in chaotic scenes of patients rushing from one pharmacy to another in search of vital drugs, while public hospitals lack adequate supplies of drugs to dispense.

Such conduct is not confined to the big pharmaceutical companies. On Tuesday it emerged that the Swiss Red Cross, a non-profit relief agency, is set to slash the number of blood donor packets it supplies to Greece. It cited concerns that it has not received full payment for previous allocations and announced that beginning in 2015 the number of blood donor packets it sends to Greece will be halved from the current annual level of 28,000.

As a result of the austerity policies demanded by the “troika” (the International Monetary Fund, European Central Bank and European Union), a staggering 4.65 million people are now either unemployed or economically inactive. There are 450,000 households in which no one is employed. Of the 2.6 million people employed in the private sector in 2010, 900,000 have been laid off. Because the duration of benefits has been slashed, just 225,000 of the unemployed now receive unemployment pay.....

Presenting the report, the bank’s chairman, George Provopoulos, claimed that economic recovery would be achieved by means of austerity and demanded that even harsher measures be imposed. “Now that the finishing line is finally visible,” he said, “we ought to intensify efforts, to quicken our pace to cover the final stretch and ensure that citizens’ sacrifices have not been in vain…”
Speaking of the victims of these policies, he declared, “Extreme and unreasonable demands from social groups do not contribute towards this goal.”

8---Vital Signs Chart: Government Cuts Slow Economy, WSJ

9---Number of the Week: Government Payrolls Shrinking Even Before the Sequester, WSJ

10---Home Buyers Are Back, but Where Are the Houses?, CNBC

Supplies are down across the nation, not just in the former crash markets, like Phoenix and Las Vegas, where investors decimated inventories of distressed homes in bulk purchases. Listings are down 31 percent in Seattle from a year ago, down 32 percent in Denver, down 20 percent in Houston, down 37 percent in Boston, according to local Realtor associations.
(Click Here: Recover Watch Map, Complete Coverage)
"At the moment it's a seller's market again," said David Fogg, a real estate agent in Burbank, CA. "Very low inventory, very low interest rates, almost no bank inventory of homes, it's crazy out there. Every good property I've listed this year has brought 10-50 offers and sales prices 10-20 percent over comps. Cash is King...

Realtors are getting so many offers they are taking the homes off the market and not accepting additional offers before any offer is even accepted," said Wynn. "This is real estate bubble 2.0 on steroids."
It is a puzzling situation, given all the warnings of a tsunami of so-called "shadow inventory" that was supposed to be flooding the market right now. As it stands, fewer distressed properties are coming to the market.

11---California Homeowners Bill of Rights pushes foreclosure starts down to levels last seen in 2005. Florida takes foreclosure activity title away from California, Dr Housing Bubble

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