Monday, February 10, 2014

Today's links

1---Number of the Day: 1%---S&P 500 companies  year-over-year revenue growth, Testosterone Pit
(The impact of stock buybacks?)


So, while inflation was 1.5%, the S&P 500 companies that have reported so far, all put together, triumphed with year-over-year revenue growth of, drumroll please, 1%.


Those are worldwide revenues. Revenues outside the US are a big part of S&P 500 luminaries like GE and IBM. GM, for example, has long been the number one brand – though it fell to number 2 last year – in what has become the largest automotive market in the world, and one of the fastest growing ones, China. Even with this tailwind, worldwide revenues only inched up 3%.


But wait, Wall-Street hype mongers are crying out, revenues don’t matter; what matters are earnings per share. In the fourth quarter, companies pulled out all stops to show, despite the dreary revenue picture, that they could still perform miracles when it came to earnings per share, and they sweated over it, and they worked on it, pushed and fudged things, and used the most effective Wall-Street engineering that money can buy to report 9.5% growth in earnings per share.


All sectors showed EPS growth, except utilities (- 3.8%) and energy (-7.9%). Telecom services, dogged by a revenue gain of only 2.2%, booked dizzying EPS growth of 24.5%. The materials sector, equally dogged by a revenue gain of 2.4%, came up with EPS growth of 24.5%. Industrials, with sales up merely 2.3%, wound up with EPS growth of 14.1%. And then the winners of this ingenuity, the best of the best, the star, the most creative in their recklessness and the most aggressive in their accounting, were financials – whose revenues plunged 11.4%. They contrived EPS growth of 24.4%....


Buyback announcements, which by sheer coincidence often come alongside revenue and earnings debacles, are designed to boost shares, or keep them from falling off a cliff. Later, as the buybacks are being executed, the additional demand for the shares drives up prices again. And best of all, the entire procedure – borrowing money to buy back shares – hollows out stockholder equity and fills the ensuing hole with debt. This has left many corporations, as far as shareholders are concerned, mere skeletons ready to topple if credit ever dries up, as it did during the financial crisis [read.... How Stockholders Get Plundered In IBM’s Hocus-Pocus Machine].
But it does one heck of a job in jacking up earnings per share....


Business success, as defined by growth in revenues and net profits and not by financial engineering and artfully fabricated EPS, is crucial to the economy. But for a quarter of a century, corporate profits have been rising at a faster rate than GDP and are now “dangerously elevated by all reasonable measures,” writes Chris Brightman, Head of Investment Management at Research Affiliates. The phenomenon is the result of a spectacular reallocation of income from labor to capital. It repressed wages and created the biggest profit bubble ever. But pressures have reached a tipping point. Read.... The Unglamorous End of the Largest Corporate Profit Bubble in History


2---Obama's record on jobs, Mark Gongloff


The government sector has slashed jobs steadily since the recession, shrinking government payrolls to their lowest level in eight years. At this rate, there won't be enough people to run the FEMA camps.


The January jobs report was a mix of disappointment and hope, with just 113,000 new payroll jobs added, but the unemployment rate falling to 6.6 percent from 6.7 percent. The report was made slightly lousier by the government sector, which cut 12,000 workers from its payrolls last month. That's not a lot of jobs, but they add up over time. As you can see from the chart below, with the exception of a hiring spike during the 2010 census, federal, state and local governments have been cutting payrolls every single month since the recession ended.


In January, there were just 21.8 million people working for the government, the lowest number since June 2005


During President George W. Bush's first term, the government sector grew by 4 percent. If it had grown at the same rate during Obama's first term -- which, we should note, included the same two wars Bush started, along with the worst recession since the Great Depression -- then the government sector would have been 2 million jobs bigger by the end of Obama's first term in January.
That 2-million-job number just happens to gibe with academic studies suggesting pointless and destructive austerity measures have cost the U.S. about 2 million jobs since the recession


3---Auto loan competition heating up , (Vehicle loan terms, stretched to average of 65 months), Sober look
The Fed's banking survey seems to indicate that senior bankers on the whole see slower demand for auto loans in the US
The demand for yield combined with ample liquidity has created a bid from shadow banking in the form of sub-prime auto ABS (asset-backed securities). The sub-prime ABS outstanding has increased significantly since the end of the recession.

Source: SIFMA

Of course all this competition means lower rates, riskier loans, and higher delinquencies.
Automotive News: - Subprime financing -- and delinquencies -- are likely to grow in 2014, says Melinda Zabritski, senior director of automotive credit for Experian Automotive.

Vehicle loan terms, which hit an average of 65 months for new cars during the first 10 months of 2013, also will continue to stretch out.
4--Andrew Huszar---Fed Insider Exposes Giant Central Bank “Easing” Swindle (archive) counterpunch


This was a program (QE) that was devised to help mortgage lending in America…Instead, what we saw was massive Wall Street earnings.” Andrew Huszar, Bloomberg TV Interview


A former Federal Reserve official who helped the Central Bank manage its bond buying program, dubbed QE, has admitted that the program is a fraud. In a shocking op-ed in Monday’s Wall Street Journal, Andrew Huszar apologized for his role in the Fed’s $1.25 trillion asset purchase program which he described as “the greatest backdoor Wall Street bailout of all time.”


So far, no one at the Fed has responded to the charges, nor has Congress or the Department of Justice (DOJ) taken steps to investigate allegations that the multi-trillion dollar program was not intended to help Main Street as announced, but to shore up flagging bank balance sheets and zombie financial institutions that would have defaulted without the Fed’s stealth welfare program.


Surprisingly, Huszar’s credibility has not yet been challenged nor his claim that he played a pivotal role in overseeing the program. As he notes in his confession, he was “managing what was at the heart of QE’s bond-buying spree—a wild attempt to buy $1.25 trillion in mortgage bonds in 12 months.” He was asked “to quarterback” the largest giveaway to Big Finance on record. The fact that his allegations have not prompted an thorough investigation of criminal malfeasance at the Fed boggles the mind and points to a justice system that makes no pretense of operating in the interests of the people it is supposed to serve.


5---Will Mobocracy Triumph in Ukraine?, Pat Buchanan


Security police who have questioned jailed rioters seem to believe we Americans are behind what is going on. And given the National Endowment for Democracy’s clandestine role in the color-coded revolutions of a decade ago in Central and Eastern Europe, that suspicion is not unwarranted.


Nor is Russian foreign minister Sergei Lavrov entirely wrong when he says, “a choice is being imposed” on Ukraine, and European politicians are fomenting protests and riots “by people who seize and hold government buildings, attack the police and use racist and anti-Semitic and Nazi slogans.”


If, as a result of street mobs paralyzing a capital, a democratically elected Ukrainian government falls, we could not only have an enraged and revanchist Russia on our hands, but a second Cold War.
And we will have set a precedent that could come to haunt Europe, as the rising and proliferating parties of the populist right, that wish to bring down the European Union, learn by our example.


6--US supports anti Semitic right wing rabble in war against Russia, antiwar


The same scam is being played out in the media today, with the viciously anti-Semitic and violent "opposition" portrayed as heroes of "democracy," and the pro-Russian factions (a majority of the country) cast as villains. And looming over this trumped up scenario is the threat of Western intervention, as in the case of Kosovo and Bosnia. The media’s war against the Russians is the kind of virtual onslaught that can ultimately result in a military offensive – we saw this in the run up to the invasion of Iraq, as well as the Balkan wars, and we are seeing it again in the propaganda campaign waged against the Iranians in the past few years.


7---Washington and US media unleash propaganda blitz on Russia, wsws


The press coverage of the Sochi Olympics reflects the media’s total subordination to the interests of the American ruling class. The US views Russia second only to China as an impediment to its imperialist interests. Washington is aggressively working to undermine Moscow's influence in Eastern Europe, supporting a far-right, anti-Russian protest movement in Ukraine that threatens to split the country in two and instigate a civil war. The White House and the Kremlin are presently at loggerheads over policy in the Middle East, with regards to both Syria and Iran....


No major Western leader or top official is attending the Sochi Olympics, and the Obama administration deliberately sent a delegation of low-ranking figures to represent the US. It includes a White House aide, former Homeland Security chief Janet Napolitano, and US Ambassador to Russia Michael McFaul, who has been a vociferous advocate of the anti-Putin opposition and just announced his resignation from his post. McFaul’s departure is widely viewed as signifying an end to the official US policy of “resetting” relations with Russia after the rift created during George W. Bush’s presidency.....


Recently passed anti-gay laws in Russia that ban “homosexual propaganda” are being utilized as one of the principal cudgels against the Putin government. While the US maintains the closest ties with regimes like Saudi Arabia, where homosexuality is punishable by flogging and death, Washington and its allies have whipped up a frenzy in the human rights community around these issues with regards to Russia....


While Russia is hardly a paragon of democratic rights, the signatories of this letter come from countries that are carrying out a massive assault on civil liberties. US President Barack Obama openly declares that he has the right to authorize the assassination of US citizens without due process, and has done so. His government presides over the largest spying operation in world history.


Accompanying the orchestrated political snubs and “human rights” agenda that have been unleashed against the Sochi Olympics are endless press stories about every alleged security and infrastructure failure. The American media, having gotten its marching orders from Washington, is in full swing.
The initial focus on the danger of a terror attack—which ignored the fact that the greatest threat to the Sochi Olympics stems from Islamist forces allied to US-backed rebels in Syria—has given way to ongoing reports about everything from the game’s massive costs and environmental damage to lurid tales of brown water coming from hotel room faucets, broken toilets and door handles, stray dogs roaming the city, and large heaps of construction garbage.


“Journalists at Sochi are live-tweeting their hilarious and gross hotel experiences,” reported the Washington Post on February 4. “Sochi: Worst Olympics Travel Destination Ever?” was the title of a recent piece in the leading US magazine Time.


In its February 7 article, “The Darkness Behind Sochi’s Sparkle,” the NY Times sought to undermine any positive impression observers might have gotten from watching Friday's elaborate opening ceremony. “It was so entrancing, and ran so smoothly, that it was tempting to forget what was behind the pageantry and sparkle,” wrote Juliet Macur, adding, “This week Sochi was like a party host whose guests had shown up way too early: just out of the shower, hair in curlers, no makeup, dirty dishes in the sink.”


8--NYT exposes itself as propaganda tool of Washington, wsws


9---Nulandgate: Leaked phone call on Ukraine lays bare Washington’s gangsterism, wsws


The real political significance of the phone conversation between Nuland and Pyatt is left largely in the shade. This is no accident, as the call provides a devastating exposure of the criminal and imperialist character of US policy in Ukraine and debunks the phony “democratic” pretensions of the Obama administration.


In his State of the Union speech last month, Obama declared: “In Ukraine, we stand for the principle that all people have the right to express themselves freely and peacefully, and to have a say in their country’s future.”


What the tape makes clear, however, is that Washington is employing methods of international gangsterism, including violence, to effect a political coup aimed at installing a regime that is fully subordinate to US geo-strategic interests. This operation has no more to do with democracy than the US-orchestrated coups in countries like Chile and Argentina some 40 years ago.


The precise goal of US efforts is to shift political power into the hands of a collection of Western-aligned Ukrainian oligarchs who enriched themselves off of the private appropriation—theft—of state property carried out as part of the Stalinist bureaucracy’s dissolution of the Soviet Union in 1991. In doing so, it aims to turn Ukraine into a US imperialist beachhead on the very border of Russia, whose territory it also wants to divide and subjugate to neocolonial status as part of its drive to assert American hegemony throughout the strategic landmass of Eurasia.


The Nuland-Pyatt conversation is concerned with the nuts and bolts of this venture.

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