Monday, February 24, 2014

Today's Links

1---California enters third year of severe drought, wsws

Presently, over two-thirds of California’s counties are in “extreme” or “exceptional” drought; conditions which on average occur every 20 to 50 years. California’s snow pack is a staggering 12 percent of its average for this time of year, the lowest ever recorded. Usually the state’s 40 largest reservoirs are 64 percent full in February; instead they are just at 39 percent capacity.

2---Western-backed Ukrainian opposition seizes power in fascist-led putsch, wsws
(Another trophy for Obama)

France, Germany and Poland, with the United States operating in the background, had worked hand-in-glove with opposition leaders Vitali Klitschko of the Udar party, Arseniy Yatsenyuk of oligarch Yulia Tymoshenko’s Fatherland Party, and Oleh Tyahnybok of the fascistic Svoboda. As the opposition had relied on fascist thugs to provide the muscle for its street protests, a negotiated settlement with them was impossible.
After signing the deal Friday night, Yanukovych fled the capital Kiev, clearly fearing that if he stayed he would meet the same fate as Muammar Gaddafi, who was murdered at the end of the NATO war in Libya.

An order has been given to arrest former ministers and for state security and the prosecutor’s office to investigate “grave crimes against the Ukrainian people, including those by former state leaders.”
In a further indication of the rightist character of the regime that has been installed, parliament voted that Ukrainian is the only official language, disenfranchising around one fifth of its population, which mainly speaks Russian.
The atmosphere is so poisonous that Ukrainian Chabad Rabbi Moshe Reuven Azman has called on Kiev’s Jews to leave the city and even the country if possible. He cited “constant warnings concerning intentions to attack Jewish institutions.”....

The European powers and Washington were the driving forces behind this putsch, aiming to break Ukraine from Russia’s sphere of influence. They have gone very far towards fulfilling longstanding geostrategic ambitions—firstly those of Germany, which has repeatedly sought to bring Ukraine under its control, and then of the US, which has sought to weaken and isolate Russia ever since the Soviet Union collapsed in 1991.

3---Philip Pilkington: Keynes’ Liquidity Preference Trumps Debt Deflation in 1931 and 2008
naked capitalism

4---Citi allowed to self-police operations, HW

Citi bank is one of several big financial institutions that will be allowed to self-police.
The Federal Reserve Board announced that Citi has been approved to exit parallel, international standard Basel III reporting for U.S. regulatory capital purposes, effective for the second quarter of 2014.

One of the stipulations for this approval is that Citi will be required to increase its estimated risk-weighted assets associated with operational risk to $288 billion from the $232 billion reported as of Dec. 31, 2013, the company said in a statement.
Other firms, such as Goldman Sachs (GS) and JP Morgan (JPM) were also reportedly granted such freedom.

5---Risks of Abenomics "stalling out" , sober look

Take energy and food — which is also probably under upward pressure in part due to yen depreciation — out of CPI and it is only up 0.7% y/y as food prices themselves are up 2.2%. Most of the CPI effects of the Bank of Japan’s efforts to depreciate the yen remain confined to a relative price shock to food and energy that crowds out spending power elsewhere in the economy on future second-round effects in the absence of a pickup in wage growth or credit access. ....
This coming Thursday Japan's Ministry of Public Management will be releasing the January CPI figures. The report will be closely watched to determine the progress of "Abenomics", as the nation tries to work its way out of the persistent long-term deflationary environment.

6--Existing-home sales slowest in more than a year, marketwatch

7---The Madness of Abenomics In One (Crazy) Chart , Testosterone Pit

8--Russia takes gold, Pravda

It was Fatherland Defenders Day yesterday in Russia and a great day to remember. The 2014 Sochi Olympics were a great success for Russia and a crown for the men who fought and served Russia in the past. We were number one with 13 GOLD, 11 SILVER and 9 BRONZE MEDALS. It was an even greater triumph considering that Russia no longer has countries from the former Soviet Union and Old Russia.....

Dr. Paul Craig Roberts who worked under President Reagan. You can download the audio interview here. "Roberts says that there is no question about U.S. involvement in Ukraine." He went on to say"
"I mean what in the world do you think Washington cares about democracy in Ukraine? They don't even have any in the United States! We have a police state that spies on everybody, the whole world. The media is a propaganda ministry. It's worse than it ever was in the Soviet Union. People have no idea of what's going on and what they're told about the Ukraine is a fabrication."

RT's Gayane Chichikyan reminded us of an old Russian saying, "The dogs bark but the caravan moves on so let them bark."

...Too-big-to-fail is at the heart of the financial crisis. The U.S. financial system is fragile...
maturity mismatch and illiquidity inherent in banking imply that bank panics are possible. ....

Indeed, large financial institutions like Bear Stearns and Lehman Brothers could take on some of the characteristics of banks - e.g. maturity mismatch - while falling outside the regulatory umbrella that covers banks. As well, the failure and resolution of a large financial institution is a potential nightmare. The possibility of systemic disruption (which we saw in the financial crisis with the Lehman failure and the subsequent problems at AIG) from a large financial institution is what leads to the too-big-to-fail moral hazard problem. That is, a too-big-to-fail financial institution understands that it is too-big-to-fail, and therefore takes on too much risk, relative to what is socially optimal. This high level of risk could be reflected, for example, in a high-aggregate-risk asset portfolio, or in a maturity mismatch between assets an liabilities.
Lacker states:
Lehman Brothers filed for bankruptcy on September 15, 2008. One day later, the insurance company American International Group (AIG) received a large credit extension from the New York Fed. At that point, regulators had resolved six large failing financial firms in five different ways. Some positions in the capital structure were rescued in one firm's resolution but not rescued in another's. Each had been handled on an ad hoc basis, without comment on how similar cases might be handled in the future. Market conditions following Lehman and AIG cried out for a general policy statement providing guidance on future interventions.....

Lacker points out
The thesis that financial market instability is inherent, rather than induced by poor policies, must also confront the fact that instances of instability are quite unevenly distributed across different countries and different regulatory regimes, as exemplified by the contrasting experiences of the United States and Canada. Over the past 180 years, the United States has experienced 14 major banking crises, compared with just two mild illiquidity episodes in Canada over the same period. If financial fragility were an inherent feature of financial markets, financial panics would be ubiquitous, but that's not what we see. 

10--Russian General: We are at war, global research

In an interview published Feb. 5 by, Gen. Leonid Ivashov, the former foreign relations head of the Russian Ministry of Defense and current president of the Academy of Geopolitical Studies, issued a sharp warning about the nature of the strategic crisis unfolding in Ukraine:
“Apparently they [officials of the European Union and U.S. Secretary of State John Kerry] have dedicated themselves, and continue to do so, to deeply and thoroughly studying the doctrine of Dr. Goebbels. . . They present everything backwards from reality. It is one of the formulas which Nazi propaganda employed most successfully: . . . They accuse the party that is defending itself, of aggression. What is happening in Ukraine and Syria is is a project of the West, a new type of war: in both places you see a clear anti-Russian approach, and as is well known, wars today begin with psychological and information warfare operations. . . Kerry and Obama are encouraging in Kiev what they harshly repress in their country. European leaders break up unauthorized demonstrations with hoses, throwing demonstrators in jail, while in the Ukrainian case they do the exact opposite, and on top of that they threaten Russia. Logically, this is part of information warfare.
“Keep in mind that, under the cover of information commotion, U.S. ships are entering the Black Sea, that is, near Ukraine. They are sending marines, and they have also begun to deploy more tanks in Europe. . . We see that on the heels of the disinformation operation a land-sea, and possibly air operation is being prepared.
“They haven’t even taught [opposition leaders] Klitchko, Yatsenyuk and Tyahnybok to run a government efficiently. The main thing is for them to take power, and destroy the Ukrainian state.”
Currently in the Ukraine, there is a parliament in Kiev and a parliament in Kharkov.  The parliament stripped Yanukovych of his powers and impeached him but he says they dont have the powers to do that and refuses to step down.  The latest reports have the President in Donetsk.  There is actually no single person in charge over there. It’s chaos.  Everything about the ‘rebellion’ reeks of western puppetry and fascism.  Everything about the Yanukovych supporters of course reeks of Russia.  The Crimea is having massive protests right now in the streets because they want to join in union with Russia.  And Russia has stated it is prepared tosend in troops to protect ethnic Russiansof which there is 7-8 million of in Ukraine.  Things are very fluid and changing hourly.

11--Fomenting revolution the American way: Fake NGO-sponsored coups, global research 

Otpor! was so successful that it was ushered into Ukraine to help manufacture regime change there in 2004, using the template applied originally in Serbia with $65 million in cash from the U.S. government.

“We trained them in how to set up an organization, how to open local chapters, how to create a ‘brand,’ how to create a logo, symbols, and key messages,” an Otpor! activist told U.S.-funded media outlet Radio Free Europe-Radio Liberty. “We trained them in how to identify the key weaknesses in society and what people’s most pressing problems were—what might be a motivating factor for people, and above all young people, to go to the ballot box and in this way shape their own destiny.”
The overthrow of Milošević was accompanied by U.S.-funding for the creation of a robust media apparatus in Serbia, and Popovic’s wife worked at one of the U.S.-funded radio and TV outlets as a journalist and anchor B92 from 2004-2009.

“By helping Radio B92 and linking it with a network of radio stations (ANEM), international assistance undermined the regime’s direct and indirect control over news and information,” a January 2004 policy paper released by USAID explained. “In Serbia, independent media supported by USAID and other international donors facilitated the regime change.”
Critics point out that what happened in Eastern Europe was regime change, not revolution in any real sense of the term.

“[They] were not revolutions at all; actually, they were little more than intra-elite power transfers,’” Portland State University Professor of Urban Studies and Planning, Gerald Sussman, explained in his book, “Branded Democracy: U.S. Regime Change in Post-Soviet Eastern Europe.”
“Modern tactics of electioneering were employed to cast regime change as populist, which took advantage of the unstable and vulnerable situations in those regions following the breakup of the Soviet Union,” he wrote.

12--Paul Craig Roberts on Ukraine coup, global research

Having interfered in Ukraine’s internal affairs and lost control, Washington is now issuing ultimatums to Russia not to interfere in Ukraine. Does the idiot Susan Rice, Obama’s neoconservative National Security Advisor, think Putin is going to pay any attention to her ultimatums or to any instruction from a government so militarily incompetent that it was unable to successfully occupy Baghdad after 8 years or to defeat a few thousand lightly armed Taliban after 12 years?  In only took a few hours for Russian troops to destroy the American and Israeli trained and armed Georgian army that Washington sent to invade South Ossetia.

Where does Obama find morons like Susan Rice and Victoria Nuland? These two belong in a kindergarten for mentally handicapped children, not in the government of a superpower where their ignorance and arrogance can start World War 3.
Ukraine is far more important to Russia than it is to the US or EU. If the situation in Ukraine spirals out of control and right-wing extremists seize control, Russian intervention is certain. The arrogant and stupid Obama regime has carelessly and recklessly created a direct strategic threat to the existence of Russia. 

 According to the Moscow Times, this is what a senior Russian official has to say: “If Ukraine breaks apart, it will trigger a war.”  Ukraine “will lose Crimera first,” because Russia “will go in just as we did in Georgia.”  Another Russian official said: “ We will not allow Europe and the US to take Ukraine from us. The states of the former Soviet Union, we are one family. They think Russia is still as weak as in the early 1990s but we are not.”

The Ukrainian right-wing is in a stronger position than Washington’s paid Ukrainian puppets, essentially weak and irrelevant persons who sold out their country for Washington’s money. The Right Sector is organized. It is armed. It is indigenous. It is not dependent on money funneled in from Washington and EU financed NGOs. It has an ideology, and it is focused. The Right Sector doesn’t have to pay its protesters to take to the streets like Washington had to do.

13---"If Ukraine breaks apart, it will trigger a war, Moscow times

Russia has warned the West that it is willing to fight a war over Crimea, a Ukrainian region where 60 percent of the population is ethnically Russian and where Russia's Black Sea fleet is stationed.
"If Ukraine breaks apart, it will trigger a war," a senior government official told the Financial Times on Thursday. "They will lose Crimea first [because] we will go in and protect [it], just as we did in Georgia."

14---US-backed coup  "empowers the openly neo-Nazi movements", ...  Tea With Neo-Nazis: The Violent Nationalism in Ukraine, Arutz Sheva

do you know how many violent racist movements in Ukraine are operating today? Sixteen more in additional to the Freedom party plus seven more of an extreme-radical character, making it twenty three in total. Do you know that together with 10,44% of the seats in the current Ukrainian parliament occupied by Freedom party, those 23 more parties would cover at least 20% of the population of that huge country of 45,5 million?”
“Yes, it is very serious” – my friend suddenly sounded alarmed, "it should be taken into serious consideration, of course”.
I continued: “Do you know that these big Ukrainian radical movements are working in close co-operation with and have very close ties to the infamous Hungarian Fascist Jobbik party?” 

Neo-Nazis as ‘Freedom Fighters’
Little more than a year ago, in Autumn 2012, the ultra-right nationalist, fervently and openly anti-Semitic Freedom party received over 10% of the seats in the Ukrainian parliament and now has a solid 37 seats in the 450-member governing body. Just over a year since the legitimisation of that party, which initially proudly called itself a National-Socialist party, the protests in Ukraine have turned into bloody riots and are very close to civil war.

Since the very beginning, a heavily racist element has been present in the rhetoric of the protests. Why did nobody in the West react adequately to these non-stop proclamations of hatred and calls for violence? Why did nobody speak about it in plain language, not once?
If any of the MPs of almost any of the Western countries – except Hungary, obviously - would allow him or herself to imitate a pale shadow of the speeches which were repeatedly heard from the podium of the Ukrainian parliament, the speeches produced by the Freedom party MPs, that Western parliamentarian would find him or herself in jail instantly.  
And to make the customary Ukrainian surrealism entirely bleak, today the Freedom party leader has become one of the three most visible, officially recognized leaders of the Ukrainian opposition. To accept it is the same as signing a decree that “from today on, we are once again living happily in a barbarian age"......

In 2012, the Anti-Defamation League officially listed the Ukrainian Freedom party as a neo-Nazi party. How it is possible in the civilised and post WWII world that this party is accepted as part of an official opposition and a partner in the negotiations attended by anyone who is not Nazi or a neo-Nazi ideology supporter? European and Western leaders do owe us the answer to that simple question.

The Right Sector of Armed Debauchers  

People who are following the situation in Ukraine, know that the notorious Freedom party looks almost like church choir boys in comparison with 23 more ultra-right radical organizations in Ukraine, several of them recently united into the Right Sector Alliance comprised of highly aggressive militants. The current reality is that those thousands of militants are well equipped with weapons and ammunition and are determined to run the war, according to their leader’s repeated statements. It is those people who have happily taken responsibility for multiple acts of arson, increasing daily terror and limitless violence. It is those people who beat severely a newly appointed official in Volyn, put him on his knees, hand-cuffed him publicly in the city square, and brought his family to stand in front of him. Those people call themselves fighters for freedom. Is this the definition of freedom with which the European leaders are happy?

These are not ‘separate accidental cases’ as we are hearing in some official comments. This is the position and practice of the absolutely real, serious, large, well organized and well prepared sector of the Ukrainian protesters, and this truth shall be realised and acted upon without delay.
There is no secret concerning the real political agenda and programs of ultra-nationalist parties in Ukraine – there is nothing close to European values and goals there. One just should open existing documents and hear what the representatives of those parties proclaim daily. They are sharply anti-European, and highly racist. They have nothing to do with the values and practices of the civilized world. Why are the European leaders embracing such forces so indiscriminately?..

The Threat to Ukranian Jewry
Ukrainian Jewry is facing a real and serious threat, and it is simply chilling to write about it on the eve of commemorating the 70th anniversary of the destruction of Hungarian Jewry. The Hungarian government is putting the commemoration on the back burner, expectedly, but unacceptably.
Twenty five years ago, in 1989, there were almost a half a million Jews in Ukraine. In just over a decade, 80% of them left the country. This fact alone tells a lot about the country’s attitude and atmosphere vis a vis Jews. Ten years later, that number had diminished by a third. Now, less than 70,000 Jews are citizens of Ukraine, according to official statistics.  ...

early elections.
To empower the openly neo-Nazi movements in Europe by ignoring the threat they pose is an utterly risky business. People should not have to pay a terrible price – again – for the meekness and indifference of their leaders. As Ukraine today has become the tragic show-case for all of  Europe with regards to breeding and allowing race-hatred to become a violent and uncontrollable force, it is impertive to handle the situation there in accordance with existing international law and norms of civilisation.

Never again, you said?

15---Three-quarters of the nation’s troubled loans were made in 2007 or earlier, oc housing

if you look at the delinquency rates at the major banks, a different picture emerges.

Does the graph above look like delinquencies are anywhere near pre-recession levels?

Three-quarters of the nation’s troubled loans were made in 2007 or earlier, and delinquency rates for loans made after that point are around historical norms, according to the Mortgage Bankers Association. “The legacy of very high foreclosure rates is a problem of older loans,” said Michael Fratantoni, the MBA’s chief economist.
That means that three-quarters of the delinquent mortgage squatters have been living for nothing for as long as seven years.
Foreclosures are down partly because the economy and unemployment rate have improved.
Not really. While it’s true that the economy has improved slightly, and the unemployment rate has improved — though mostly from discouraged workers leaving the workforce — the improvement in foreclosures is not due to people going back to work, making up the missed payments, and curing their mortgages. That’s what is implied, but that isn’t what’s happening.

15--Readers comments economist's view

said in reply to anne...
Real home prices in the United States over long periods of time have simply tracked inflation. The real home price index was 100 in 1890 and 106.73 at the close of 1996. The housing bubble brought the home price index to 198.01 by the beginning of 2006, while the deflation of the bubble brought the index to 114.04 at the beginning of 2012.
We currently have the home price index at 134.47, a level that had never been found before 2001 and that is importantly higher than the long term average level. Unless home prices from here can be considered to be permanently above long term levels, we should not expect any meaningful increase from here in the real price index.

NDD said...
Since I am the person with whom Bill McBride has the $100 charitable bet about the direction of housing in 2014 (my bet is that YoY housing permits, starts, or sales will be at least -100,000) YoY, allow me to point you to my data, which is quite straightforward, and based on the behavior of interest rates vs. housing for the last 70 years:
As far as I am concerned, the recent weakness is exactly what I've been expecting, based strictly on a 1% increase in interest rates. The real questions from here on are, how deep and how long? How deep I've pretty well already answered. How long depends on the course of interest rates from here on. If interest rates steady, so will housing later in the year. For an increase, we need a further decline in rates from their December peak, or in unicorn land a significant increase in real median income. Prices will plateau and probably come back down some after the slowdown is more entrenched.

Charlie Baker said...
Real Median Household income is over $4000 below its level in 2000 (!), down 7.5%:
In fact, it's lower now than it was at any point between 1996 and 2008:
Yet real house prices, per the Case-Shiller data, are up over 9% from 2000, and 18% up from the post-recession lows. Factor in the uptick in interest rates, and the decline in institutional buyers, and voila: flat housing sector growth.
Per NDD earlier, I would argue that the real median income unicorn is a slightly bigger factor than the interest rate. Doesn't matter what the interest rate is if you can't make the down payment, and all the EZ mortgage scams are not coming back, at least not those of the 2006 vintage. Most of the economic improvement of the last few years is going to people who already own a house (or three).

Presently, over two-thirds of California’s counties are in “extreme” or “exceptional” drought; conditions which on average occur every 20 to 50 years. California’s snow pack is a staggering 12 percent of its average for this time of year, the lowest ever recorded. Usually the state’s 40 largest reservoirs are 64 percent full in February; instead they are just at 39 percent capacity.

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