Sunday, August 11, 2013

Today's links

1---U.S. Congress Approval Remains Dismal, Gallup

15 percent of Americans approve of Congress in July (Big surprise)
Trend: Do you approve or disapprove of the way Congress is handling its job?

2---Americans' Approval of Supreme Court Near All-Time Low, Gallup

3--More Japan worries, Testosterone Pit

Japanese consumers more morose: consumer confidence in July fell 0.7% from June to 43.6, according to the Cabinet Office. This is actually, for the Japanese, a middling result. Even during the halcyon days of the bubble in 1988-89, the index barely made it above 50 and topped out at 50.6. By December 1993, it was down to 35.7. It then entered a rollercoaster with highs barely above 40 and a low of 34.8 in September 1998. Things got better, or people got used to how they were, and in April 2006, it actually hit 50.0. Then it drifted down again to an absolute low of 26.4 in 2009 during the financial crisis, but bounced back to 40.5 by September that year. It dropped to 33.4 in April 2011, following the earthquake, but then rose to 40.8 by June 2012. This year, a bout of optimism set in, and in May, it reached 46.0, a spark of euphoria by Japanese conditions, caused by the stock market bubble and Abenomics hype. Alas, wages haven’t budged and reality has set in. So the index has been dropping again – sharply, from 46.0 in May to 44.0 in July.

Japan government debt over ¥1 QUADRILLION for the first time ever: in June, total borrowing by the central government reached ¥1,008.63 trillion (about $10 trillion), up ¥17 trillion from the prior quarter, according to the Finance Ministry. With a nominal GDP of ¥475.7 trillion in 2012, Japan’s gross national debt now is a phenomenal 212% of GDP, much worse than Greece’s 160%, with further and rapid deterioration on schedule. That this cannot work out is clear. What’s not clear is when and how this will be “resolved.”

4---U.S. Companies Thrive as Workers Fall Behind, NYT

AMERICAN companies are more profitable than ever — and more profitable than we thought they were before the government revised the national income accounts last week. Wage earners are making less than we thought, in part because the government now thinks it was overestimating the amount of income not reported by taxpayers. ...

corporate profits after taxes amounted to a record 9.7 percent of G.D.P. Each of the last three years has been higher than the earlier record high, of 9.1 percent, which was set in 1929.
The charts help to demonstrate how the postrecession economy differs from the one before the downturn. In the three years from 2005 through 2007, the share of G.D.P. going to corporate profits was 1.5 percentage points lower than it was during the years 2010 through 2012. The share going to workers was 1.1 percentage points higher during the earlier years.
      
Corporate taxes, as a proportion of corporate profits, rose to a four-year high of 21.6 percent in 2012, but remained well below the long-term average level. Personal taxes also hit a four-year high, at 14.1 percent of personal income, but were still well below the historical average.
 
 
 
While economists tend to think that inflation is quite healthy for Japan after years of deflationary pressures, it may be difficult for the consumer to adapt to the new regime. Wages have been declining for some time (see discussion), which is less of a problem when prices are falling.  It becomes a problem when prices rise and are combined with the new sales tax.


 This change could be particularly difficult without any substantial labor reforms that would allow wages to keep up with rising prices (maintain real wage stability). BOJ's target of 2% inflation could prove to be a painful adjustment for the Japanese consumer. This adjustment may already be making its way through the economy, reflected by weaker economic indicators.
 
 
Barclays Capital: – During the recession and the subsequent recovery with its weak growth, companies have been aggressively managing their bottom line. They’ve refrained from hiring, raising pay or otherwise investing in business expansion. Compensation as a percentage of GDP has been falling since the end of 2008 and now stands close to a 13-year low.
Moreover, some are suggesting that the Patient Protection and Affordable Care Act will ultimately result in even higher ratios of part-time employees – and therefore lower household incomes. While there is little evidence for this currently (see Bloomberg analysis), longer term effects remain uncertain. Whatever the case, with wage growth suppressed and consumers still driving over 70% of the nation’s GDP, weak economic growth should not be a surprise

8---Lavabit email shuts down after refusing to comply with “crimes against the American people”, wsws

Texas-based secure email provider Lavabit has closed down its operations rather than “become complicit in crimes against the American people” by complying with demands from the US government, apparently for access to the mail company’s servers and customer information.
On Wednesday, Lavabit, which has about 350,000 users, posted a notice on its website from owner Ladar Levinson.

Levinson wrote. “I have been forced to make a difficult decision: to become complicit in crimes against the American people or walk away from nearly ten years of hard work by shutting down Lavabit.”
He explained that after “significant soul searching, I have decided to suspend operations. I wish that I could legally share with you the events that led to my decision. I cannot. I feel you deserve to know what's going on—the first amendment is supposed to guarantee me the freedom to speak out in situations like this. Unfortunately, Congress has passed laws that say otherwise. As things currently stand, I cannot share my experiences over the last six weeks, even though I have twice made the appropriate requests.”

Levinson warned that “without congressional action or a strong judicial precedent, I would strongly recommend against anyone trusting their private data to a company with physical ties to the United States.”

9---Japan Inc. Earnings Double to Give Momentum to Economic Recovery, Bloomberg

10---The Fed's Money Trap, American Thinker

11--Guy does to bank what banks usually do to other people, Big Picture
                 
The idea of beating the banks at their own game may seem like a rich joke, but Dmitry Agarkov, a 42-year-old Russian man, may have managed it. Unhappy with the terms of an unsolicited credit card offer he received from online bank Tinkoff Credit Systems, Agarkov scanned the document, wrote in his own terms and sent it through. The bank approved the contract without reading the amended fine print, unwittingly agreeing to a 0 percent interest rate, unlimited credit and no fees, as well as a stipulation that the bank pay steep fines for changing or canceling the contract.
 
Agarkov used the card for two years, but the bank ultimately canceled it and sued Agarkov for $1,363. The bank said he owed them charges, interest and late-payment fees. A court ruled that, because of the no-fee, no-interest stipulation Agarkov had written in, he owed only his unpaid $575 balance. Now Agarkov is suing the bank for $727,000 for not honoring the contract's terms, and the bank is hollering fraud. "They signed the documents without looking. They said what usually their borrowers say in court: 'We have not read it,'” Agarkov's lawyer said. The shoe's on the other foot now, eh? [Source]

 

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