Saturday, February 15, 2014

Today's links

1--Young Adults Living at Home Less Likely to Be "Thriving", Gallup
Living at home also affects overall well-being...

 Fourteen percent of those between the ages of 24 and 34 report that they live at home with their parents.....The data show that those between the ages of 24 and 34 who live at home tend to be unattached -- in the sense that they are not married and less likely to have a full-time job -- and also to be less well-educated. This research underscores the idea that living at home may have some emotional costs for young adults -- particularly in terms of their perceptions that they are not enjoying the best possible life, beyond those associated with being unemployed or unmarried.

2---U.S. Economic Confidence at Lowest Level Since December, Gallup
Americans' pessimism about economy's direction contributes to decline

3---The trouble in the EZ: Some firms may need to “disappear in an orderly fashion” , Bloomberg

dark corner of European finance is about to be illuminated by European Central Bank inspectors who are sifting through loans that banks restructure for clients and don’t fully disclose.

“What’s scaring investors is the question of whether banks are giving money to companies that deserve to go bankrupt and keeping them alive to avoid recording losses,” Mascia Bedendo, an assistant professor of finance at Bocconi University in Milan, said in a phone interview. “The amount of forborne and nonperforming loans is still very obscure.” ...

Banks can be creative when it comes to valuing assets, so the ECB’s review is a welcome opportunity to see which ones need capital,” said Lutz Roehmeyer, who manages $1 billion including bank stocks and bonds at Landesbank Berlin Investment. “Spanish banks have been a bit optimistic on valuing real estate, while the Italians seem to have put off dealing with a few problems, so if you’re invested in those countries, you’ve got to keep that potential capital gap in mind.” ...

Some firms may need to “disappear in an orderly fashion” rather than be recapitalized or merged with other banks, Daniele Nouy, hired as chief of the ECB’s regulator in December, said in a Financial Times interview published Feb. 10 and posted on the central bank’s website. She didn’t name any lenders.

4---Do investor home sales mask a sick housing market? HW repeat

Experts warn fundamentals just aren't there

...the Corker-Warner bill does much more than just eliminate Fannie and Freddie. In their place, it would establish a system whereby private financial institutions could issue mortgage-backed securities (MBS) that carry a government guarantee. In the event that a large number of mortgages in the MBS went bad, the investors would be on the hook for losses up to 10 percent of its value, after that point the government gets the tab.

Since the 2011 Euro crisis, the governments of Belgium, France, Germany, Greece, Ireland and Italy have been cursed with one or more former Goldman Sachs executives in their key financial positions. At the beginning of 2013 Britain, too, brought in Mark Carney from Switzerland's sinister central bankers' central bank, the Bank for International Settlements (BIS). He, too, is ex-Goldman Sachs, as is the European Central Bank's president, Mario Draghi.

Goldman Sachs are key players, too, in one of the planet's most formidable political lobbying outfits, the Bilderberg meetings. Founded and chaired by a former SS officer, Prince Bernhard of the Netherlands, until 1975, Bilderberg has an uncanny knack of inviting NATO secretary generals, prime ministers and presidents to their secret conclaves with royalty and their oil and media barons, just before they come to power.

So let's face the painful fact: unless a politician is prepared to name, shame and throw Goldman Sachs and the other privately-owned vampire banks to the floor he or she is simply not worth our vote. For since these crooked institutions were bailed out in 2008, they have consolidated their grip on Western politics and, more worryingly, us – that is our dependence on them for our day-to-day needs.

8--AA not the only way to "get clean"  PS

9---"US ready to do business with Modi.” (terrorist), wsws

Big business is looking to Modi to push through a raft of socially regressive, “pro-market” reforms and to eliminate a massive budget deficit through social spending cuts. ....

Since 2005 Washington has refused to grant Modi a visa to visit the US and otherwise eschewed official contact with him, citing his government’s role in a 2002 anti-Muslim program in Gujarat that resulted in the deaths of more than a thousand people and rendered tens of thousands homeless.
There is incontrovertible evidence of Modi’s political and criminal responsibility for the 2002 Gujarat pogrom. He blamed the state’s Muslims for a train fire that killed a large number of Hindu fundamentalist activists, called for a statewide “day of protest,” and ordered police to stand down as riots erupted. One of his protégés and ministers, Maya Kodnani was convicted of murder after numerous witnesses identified her as leading anti-Muslim mobs and identifying Muslim homes and businesses for attack.

Nevertheless, Modi has escaped criminal prosecution and the state government he leads has been able to remain in office due to the cowardice and complicity of the courts, police, and Congress Party-led central government. In 2012 India’s Supreme Court ruled that there was insufficient evidence to lay charges against Modi.
The European Union joined the US in its diplomatic “boycott” of Modi for almost a decade. But this changed in late 2012 as powerful sections of Indian business began promoting Modi as their preferred candidate for national prime minister

10---White House sued for covering up crimes of JPMorgan, wsws
Better Markets, a non-profit Wall Street watchdog, filed a lawsuit Monday against the US Department of Justice (DOJ) alleging that its $13 billion settlement with JPMorgan Chase over the bank’s sale of toxic mortgage-backed securities in the run-up to the financial crisis was an illegal cover-up.

Better Markets said the deal, worked out in November 2013, “gave JP Morgan Chase… blanket civil immunity for years of alleged pervasive, egregious and knowing fraudulent and illegal conduct that contributed to the 2008 financial crash and the worst economy since the Great Depression.”
The lawsuit argues that the Department of Justice sought to use the deal—the largest settlement with a single entity in US history (by more than 300 percent)—to protect JPMorgan and its executives from prosecution. Under the terms of the settlement, the bank was not required to admit to any wrongdoing.

Better Markets alleges that, “the DOJ violated the Constitution and laws of the United States by using a mere contractual agreement to resolve claims of historic importance without subjecting the Agreement to independent judicial review.”
In November, the Obama administration and JPMorgan concluded a series of confidential, off-the-record, negotiations—including discussions between JPMorgan CEO Jamie Dimon and Attorney General Eric Holder—with the announcement that the bank would pay $13 billion to settle charges that it knowingly sold worthless mortgage-backed securities on false pretences...

The criminal activities of JPMorgan are not the exception on Wall Street, but the rule. In 2011, Senator Carl Levin, chairman on the Senate Permanent Subcommittee on Investigations, oversaw a 630-page report on the financial crash detailing illegal activities by Washington Mutual, Deutsche Bank and Goldman Sachs that contributed to the global crisis. He said the investigation had uncovered “a financial snake pit rife with greed, conflicts of interest and wrongdoing.”

Over the past year, JPMorgan has agreed to pay over $20 billion in settlements to cover a dizzying array of charges. Less than a month ago, the bank agreed to pay $2.05 billion in fines and penalties to settle charges that it was an accomplice in the multi-billion-dollar Ponzi scheme operated by Bernie Madoff, who is currently serving a 150-year prison term.

11--The European governments are absolutely at one with the maintenance of a vast surveillance operation directed at monitoring every activity of people the world over, including the more than 700 million Europeans, wsws

12---(Today's "must read") Rising Inequality – Recovery Occurring Almost Exclusively Among the Wealthy, naked capitalsim

America’s income inequality has grown so wide that the current “recovery” is driven primarily by the upper fifth of income earners, as revealed by the latest consumer spending data. Right now, more than 60% of all consumer spending is done by just the top 20% of income earners. And retailers are noticing....

Much of this is revealed in a study of consumer spending as described in a recent New York Times article.
First, the money quote, then more from the article. The quote:
[T]he current recovery has been driven almost entirely by the upper crust [the top 5% of earners], according to [the study's authors] Mr. Fazzari and Mr. Cynamon. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.
More broadly, about 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income, according to the study, which was sponsored by the Institute for New Economic Thinking, a research group in New York.
...Most Consumption Occurs At the Top....
From the top part of the graph, we find that the top 5% of income accounts for almost 40% of consumption. That’s stunning in itself. From the middle part, we see the top 20% of income now accounts for more than 60% of consumption. And from the bottom, the other 80% of the nation by income — all of the rest of us — account for less than 40% of consumption. And again, as the graphs show, the trend is widening.
The vast “shrinking middle”
All of this means that the buying power of our vast middle class is shrinking, and with it the wealth of the companies that depend on it. ....

Investors have taken notice of the shrinking middle. Shares of Sears and J. C. Penney have fallen more than 50 percent since the end of 2009, even as upper-end stores like Nordstrom and bargain-basement chains like Dollar Tree and Family Dollar Stores have more than doubled in value over the same period.
The same trend is true for restaurants, where middle class brands — think Olive Garden and the like — are hurting. At Olive Garden (average bill of about $16 per diner), revenue is falling. At Capital Grille (average bill of about $70 per diner), revenue is up.
The Nation’s Median Income Is Still Under Water
Another way to see our widening income inequality is by looking at the following chart, published by Doug Short at his excellent analytic site. Short compares “nominal” growth in the nation’s median income — “nominal” means using the raw, non-inflation-adjusted numbers for each month and year — to the inflation-adjusted, or “real,” income numbers. The period covered is January 1990 through December 2013.
Keep in mind, this data represents the exact middle — the 50% mark in household income — a proxy for the very middle of the middle class. People above the 50% line are doing better than this. People below the 50% mark are doing worse. Here’s the chart (click to enlarge):
While the red line (unadjusted income) shows nominal improvement, the inflation-adjusted numbers are terrible. The median income, the exact middle, fell to nearly –10% after the 2008 crash, then “recovered” to only –7.5%. The middle income earner has lost a lot of buying power since the 2008 recession, and she’s still very much under water. No recovery there. No wonder Sears is closing its flagship Chicago store, while Nordstrom’s business is booming.....

The stunning reality illustrated here is that the real median household income series spent most of the first nine years of the 21st century struggling slightly below its purchasing power at the turn of the century. Real incomes (the blue line) hit an interim peak at a fractional 0.7% in early 2008, far below the nominal illusionary peak (as in money illusion) of 27.2% six months later and now at 27.8%, just fractionally off its new high of 28.7% set in September. In contrast, the real recovery from the trough has been depressingly slight.
Tales of the carved-out middle, and two ways to see it.
Mr. Fazzari, at some point in the Times article, says: “It’s going to be hard to maintain strong economic growth with such a large proportion of the population falling behind.” True on its face. If no further shocks occur, if the wealth and income divide widens no further, and if the median earner continues to recover a meager 2.5% of earning power every two and a half years, then in about eight years — 2022 — that person will be at the break-even point relative to 2008, or 1990. She will have made it back to “zero” after the crash. In other words, no income improvement in 32 years, a whole working lifetime.

13---The Middle Class Is Steadily Eroding. Just Ask the Business World., NYT

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