Wednesday, October 23, 2013

Today's Links

1---Why have young people in Japan stopped having sex?, Guardian
The number of single people has reached a record high. A survey in 2011 found that 61% of unmarried men and 49% of women aged 18-34 were not in any kind of romantic relationship, a rise of almost 10% from five years earlier. Another study found that a third of people under 30 had never dated at all. (There are no figures for same-sex relationships.) Although there has long been a pragmatic separation of love and sex in Japan – a country mostly free of religious morals – sex fares no better. A survey earlier this year by the Japan Family Planning Association (JFPA) found that 45% of women aged 16-24 "were not interested in or despised sexual contact". More than a quarter of men felt the same way...
The sense of crushing obligation affects men just as much. Satoru Kishino, 31, belongs to a large tribe of men under 40 who are engaging in a kind of passive rebellion against traditional Japanese masculinity. Amid the recession and unsteady wages, men like Kishino feel that the pressure on them to be breadwinning economic warriors for a wife and family is unrealistic. They are rejecting the pursuit of both career and romantic success.

"It's too troublesome," says Kishino, when I ask why he's not interested in having a girlfriend. "I don't earn a huge salary to go on dates and I don't want the responsibility of a woman hoping it might lead to marriage." Japan's media, which has a name for every social kink, refers to men like Kishino as "herbivores" or soshoku danshi (literally, "grass-eating men"). Kishino says he doesn't mind the label because it's become so commonplace. He defines it as "a heterosexual man for whom relationships and sex are unimportant

2---Wall Street nearly flat on lackluster earnings, Reuters

U.S. stocks ended little changed on Monday as lackluster earnings reports from McDonald's and others fed concerns that equities were overpriced after the S&P index's run to record highs last week.
Investors also showed a reluctance to make aggressive bets ahead of Tuesday's release of U.S. payrolls data for September, which was delayed by the recent government shutdown.

"You could be seeing some profit-taking" after last week's highs, said Uri Landesman, president of Platinum Partners, which manages more than $1 billion in assets in New York. "You could also see some profit-taking off a weak jobs number tomorrow or in advance of the number today."

3---Top China Banks Triple Debt Write-Offs as Defaults Loom, Bloomberg

Erasing the worst of the bad debts may allow the banks to mitigate a surge in nonperforming-loan ratios amid rising defaults in the world’s second-largest economy. China has eased rules for writing off debt to small businesses since 2010 and policy makers are pushing the lenders to increase risk buffers following an unprecedented credit boom that began in 2009.

4---Surging Stocks and Slumping Economy Duality To Continue For a While - Trimtabs

So where are we right now in the market and the economy? Well the market value of all US and global stock markets are back around the same $60 trillion peak reached in 2007. That’s about double the 2009 low. Why are stocks up? Simple. Central banks have created trillions of new money with which to buy bonds and stocks.

At the same time, despite the trillions in money creation, global economic growth has been marginal after inflation. In other words, while both the global economy and stock markets crashed in 2008 and 20099, the value of all stocks has soared since then while the global economy is barely holding its head above water.

That is where we are right now – a surging stock market and a global economy that is barely growing after inflation. So, knowing where we are now, where are we headed? Well for the immediate future, for as long as the central banks keep creating money at the same pace, what is most likely is that stocks will keep going up. But without any new catalyst for growth the global economy will barely grow.

Remember, I use a supply and demand framework upon which I overlay my what is happening, what is so, right now analysis. TrimTabs has reported that since 2010 the total number of shares in the US stock market has grown by less then 3% in total, which translates into a few hundred billion dollars of share supply. At the same time the Federal Reserve has pumped grown it’s balance sheet by around $3 trillion. So what happens when trillions more money – starts chasing a few hundred billion dollars supply of shares? That right stocks go up.

It really is that simple. Stocks go up when the demand from trillions of more money – even if it is newly created – overwhelms a few hundred billion dollar supply of shares. Looking back over the fast few years, whenever the Fed pumped new money into financial assets, stocks went up. When it stopped printing stocks went down. And when the Fed started printing again stocks went back up.

5---EZ needs a weaker euro, Testosterone Pit

Europe is the only region in the world, five years after the financial crisis, that hasn’t returned to growth,” he said. But he had a solution.
“The euro is too expensive!” he said. “If it were 10% lower against the dollar, we’d increase our national wealth by 1.2%” – by watering it down – “create 150,000 jobs, and reduce our deficit by €12 billion. If the euro dropped 20%, we’d eliminate our trade deficit, create 300,000 jobs, and reduce by a third our budget deficit,” he said.

He didn’t mention the even more potent solution: If the euro dropped 30%.... Or 40%. By the time it loses 95% of its value, an accomplishment that took the Fed 100 years, all of France’s economic problems would be solved.
“We demand that the European Central Bank do what all other governments do: adjust rates according to our interests. The euro is too expensive, too strong, and a bit too German. It should be a bit more Italian, French, and basically more European,” he said.

Devaluations are always effective solutions. Italy devalued the lira in 1990 and again in 1992. Look how well Italy is doing. And France, after a series of devaluations since 1945, “revalued” the franc in 1960 at 100 old francs to 1 new franc. Then the dance started all over again: From 1960 through 1999, when the franc was replaced by the euro, it lost another 88% of its value.

6---IMF to Japan: Implement radical anti worker reforms now, WSJ

While public spending along with private consumption have been key factors in recent strong readings of gross domestic product, underlying economic data that reflect what fundamentally drives the nation’s economy paint a different picture. Neither industrial production nor machinery orders have logged significant gains in recent years, while the country has racked up 15 straight months of merchandise trade deficits.

The IMF has long called for radical, market-driven reforms as a way to kick-start Japan’s long-dormant economy. Deregulating the agricultural sector, encouraging foreign investment, increasing labor mobility and relaxing immigration rules are among the recommendations the IMF made in its annual consultation with Japan this year.

Mr. Abe has pledged to undertake bold reforms, calling them “the third arrow” of his “Abenomics” policy after “the first arrow” of monetary easing and “the second arrow” of fiscal stimulus. But the announced programs so far have been seen as a far cry from the proposals that the IMF and the business community have suggested.

The IMF paper warned that incomplete implementation of structural reforms in Japan could lead to slower growth, requiring further fiscal stimulus to close the output gap and boost inflation in the near term, leading to a further deterioration in Japan’s fiscal conditions, already the worst among developed countries.

Under the scenario of incomplete policy implementation, Japan’s government debt is projected to increase to around 310% of its GDP by 2030, from around 240% now.

7---Sales of Existing U.S. Homes Fall as Affordability Drops, oc housing

Sales  of existing U.S. homes fell in September for the first time in three months as higher prices and mortgage rates curbed demand in an industry that helped boost the expansion last year.

 Purchases dropped 1.9 percent to a 5.29 million annual rate from a revised 5.39 million pace in August that was the strongest since 2009, the National Association of Realtors reported today in Washington. The median price of a house climbed 11.7 percent from 2012, pushing affordability to an almost five-year low, the group said.

 “We see a little bit of a bumpy ride,” said Kevin Cummins, an economist at UBS Securities LLC in Stamford, Connecticut, who correctly projected the drop in sales. “The jury is still out on home sales and how much of a pullback we might see due to higher mortgage rates.”

Rising prices and stagnant incomes combined with higher mortgage rates are making it more expensive to purchase a property, Yun said at the news conference.

Affordability is getting hit quite sharply,” he said. “Lower affordability will hamper home sales going forward.” The group’s affordability index fell to 156.1 in August, the lowest since November 2008, from 160.7 the prior month. It reached a record 213.6 in January in data going back to 1989. A reading of 100 means a household making the median income can afford the median-priced house at current mortgage rates ...

California home sales fall to 1988 levels
Low inventory stifles demand as market recovers from bust

8--Ken Rogoff Loses It, Calls Criticism of Errors in Debt Paper a “Witch Hunt”, naked capitalism

Dean Baker described the high human cost of the Reinhardt and Rogoff’s snake oil:
This is a big deal because politicians around the world have used this finding from R&R to justify austerity measures that have slowed growth and raised unemployment. In the United States many politicians have pointed to R&R’s work as justification for deficit reduction even though the economy is far below full employment by any reasonable measure. In Europe, R&R’s work and its derivatives have been used to justify austerity policies that have pushed the unemployment rate over 10 percent for the euro zone as a whole and above 20 percent in Greece and Spain. In other words, this is a mistake that has had enormous consequences...

9---Us versus Them, naked capitalism

“The rising tide did not lift all the boats: it floated a few yachts.”

Rising political polarisation in the US has gone hand-in-hand with rising income inequality, falling top-end tax rates, lower taxes on business, rising leverage and higher asset prices. These trends may be coincidental, but they seem to reinforce each other. The medium-term risk is that some of these trends reverse, as occurred after the 1920s....

Inequality has not risen because the rich got richer faster than the poor. It increased because the income gains of the past 30 years have gone to the top 1%. Average income for the bottom 99% is now unchanged in real terms over the past 40 years (Exhibit 3). The rising tide did not lift all the boats: it floated a few yachts.
In 2012 the highest-paid 1% earned 21½% of total income, according to academic Emmanuel Saez ( This is the highest share since the 1920s.

Rising inequality was also correlated with the rise in the relative pay of workers in finance (Exhibit 5).
The rise in financial pay also was associated with the rise in economy-wide leverage (Exhibit 6). This was similar to the 1920s. Both periods saw important technological innovations and large credit booms...

All these trends were favourable the owners of financial investments and for people working in the investment industry. Neither has had it this good since the 1920s. This cycle, like the 1920s, could have ended in a depression. Instead, aggressive policy response of central banks seems to have added another leg to the cycle. However, pushing these trends to historical extremes may start to cause problems for investors, as illustrated by the debt ceiling imbroglio. More to the point, it seems plausible that these trends will reverse, at some stage, to the detriment of financial assets.

From comments: 
Then the neoliberals come out and say things like this, which Minack mindlessly parrots: “Workers in the developed countries must accept lower pay so workers in the developing countries can make more.”
For me, this is the biggest lie of some very big lies which the neoliberals tell.
Take Mexico, for instance. Since 1982 when neoliberalism first began to be forced on the Mexican under-classes, the purchasing power of the minimum wage has fallen 71.3 percent. That of the wage of the average union worker has fallen 50%.
According to what Roy writes, and reports like the following link, workers in India and China have fared no better, and their plight may even be worse than that of Mexican workers:
101 East: China’s labour pains
I think it all goes back to something George Orwell wrote:
All left-wing parties in the highly industrialized countries are at bottom a sham, because they make it their business to fight against something which they do not really wish to destroy…. We all live by robbing Asiatic coolies, and those of us who are “enlightened” all maintain that those coolies ought to be set free; but our standard of living, and hence our “enlightenment” demands that the robbery shall continue. A humanitarian is always a hypocrite, and Kipling’s understanding of this is perhaps the central secret of his power to create telling phrases. It would be difficult to hit off the one-eyed pacificsm of the English in fewer words than in the phrase, “making mock of uniforms that guard you while you sleep.” It is true that Kipling does not understand the economic aspect of the relationship between the highbrow and the blimp. He does not see that the map is painted red chiefly in order that the coolie may be exploited. Instead of the coolie he sees the Indian Civil Servant; but even on that plane his grasp of function, of who protects whom, is very sound. He sees clearly that men can only be highly civilized while other men, inevitably less civilized, are there to guard and feed them.
–GEORGE ORWELL, “Rudyard Kipling”
10--Bloated Government? Federal Employment at 47-Year Low, NYT

Thanks Obama

11--Doomsday Report: Foreigners Sold U.S. Assets as China Reduces Treasuries, Bloomberg

See also--

12---Stocks breaking the all-time high barrier, USA Today

13---White House Defends Drone Strikes, antiwar
           Insists Civilians Are Killed in Every War

14---Lackluster US jobs report points to ongoing slump, wsws
The US economy added 148,000 jobs in September, less than the number expected by economists and barely enough to keep up with population growth, according to figures released Tuesday by the Labor Department....

September’s job growth would be considered adequate in an economy that had already largely recovered from the recession, but it is well below the sustained job growth of 200,000 to 300,000 a month that would mark a robust jobs recovery,” wrote Chad Stone, chief economist at the Center on Budget and Policy Priorities.
The number of people employed by the federal government fell by 6,000 in September, to 2.723 million, the lowest number of civilian employees since 1966. The federal government now employs only 2.0 percent of all employed people, down from 4.3 percent that year.
Since February 2010, the total number of state, local, and federal government jobs in the US fell by 590,000, led by a reduction of 344,000 local government jobs....

“The labor market lost, rather than gained, momentum over the summer, leaving us with less than a desirable cushion just as the government was shuttered,” Diane Swonk, chief economist at Mesirow Financial, told the New York Times .

The growth in payrolls was significantly below economists’ predictions of an increase of 180,000 jobs. The figures for July and August were revised upward in the report.

The US has recovered only 7 million out of the 8.5 million jobs lost during the recession. Since the beginning of the economic “recovery” in 2009, however, the working age population has increased by 7.4 million, meaning that the gain in jobs relative to population growth has been essentially zero.
“Overall, this was a weak report, and the general tone reflects a dramatic weakening in labor market momentum in the month ahead of the government shutdown and debt ceiling impasse,” Millan Mulraine, director of US Research & Strategy at TD Securities, told the Wall Street Journal .

The share of the US population that is employed remained at 58.6 percent in September, largely unchanged from what it has been since 2009, and down from 62.7 percent in December 2007. Nearly 37 percent of all unemployed, or a total 4.1 million people, have been unemployed 27 weeks or more.
The number of people who were not in the labor force grew by 136,000 in September, according to the governemnt’s survey of households. Even though the unemployment rate dropped to 7.2 percent, down from 7.3 percent the previous month, it was not accompanied by either an increase in the percentage of the population that is employed or the labor force participation rate.
The percentage of the population in the labor force this year dropped to levels last seen in 1978, before tens of millions of women began working.
The Obama administration has made unlimited fun
ds available for the financial elite, while nothing has been done to hire workers or address the jobs crisis in America. The supposed “jobs” programs proposed by the government have consisted almost entirely of various deregulation schemes or corporate tax cuts.

Even as the Federal Reserve pumps $85 billion into the financial system every month, the government has aggressively slashed policies that benefit working people, including the expiration of a payroll tax cut at the beginning of the year and the $85 billion in spending cuts known as the sequester. Now, in the aftermath of the government shutdown, Democrats and Republicans are conspiring to slash hundreds of billions more from key social programs, including Medicare and Social Security. The shutdown has also had a disastrous effect on the personal finances of government workers and

15---FDR’s First Inaugural Address, history matters

Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the use of our natural resources.....

in our progress toward a resumption of work we require two safeguards against a return of the evils of the old order; there must be a strict supervision of all banking and credits and investments; there must be an end to speculation with other people’s money, and there must be provision for an adequate but sound currency.

16---Beware the "Grand Bargain", counterpunch

The essence of neoliberalism can be reduced to the following: government should be used exclusively to help big business and the wealthy with tax cuts, subsidies, privatizations, anti-labor laws, etc., while all government programs that help working and poor people should be eliminated. It’s really that simple.
In practice, Obama’s neoliberalism is blatant: after bailing out the banks he continues to approve of the printing of thousands of billions of Federal Reserve dollars to give to the wealthy and big banks who are racking in record profits, while the jobs crisis is ignored and public services slashed on a state by state level without hope of a government bailout.
Since Obama has been in office, a shocking 95 percent of income gains went to the richest 1%. This is not the blind hand of the free market, but government policy, which can be adjusted to reflect the priorities of working people.

Obama dodges responsibility for his neoliberal policies by giving empty speeches about “hope” and whining about the very wealth inequality that he creates via policy. He gives speeches to labor unions about how it’s “unfair” that the rich just happen to be getting richer, while working people continue to suffer. Working people learned long ago to ignore Obama’s “progressive” blather, while the leaders of national unions drink in his words as if gulping from the Holy Grail.

The first steps of the coming Grand Bargain have already been taken: the “sequester” — massive cuts to national social programs including Medicare — have been extended as a result of government shutdown “negotiations.” And now the media is casually reporting that a Grand Bargain that further “reduces entitlements” is inevitable, but it will be only a “small” bargain, so no need to worry.....

The attacks on Social Security, Medicare, and public education are neoliberal-style ”structural reforms,” essentially a corporate attempt to change the underlying social compact of U.S. society that was created under Franklin D. Roosevelt and expanded under Lyndon Johnson’s “Great Society” programs....

Naomi Klein’s book, “The Shock Doctrine,” tells in gruesome detail the brutality that has accompanied the “implementation” of neoliberal reforms across the globe over the last 30 years. And while the U.S. has slow played this process since 2008, U.S. politicians are slated to follow the example of the European Union elites by accelerating the cuts on a national level.

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