Wednesday, April 16, 2014

Today's Links

1---EZ Deflation Alert, Reuters

2---As growth slows, Bank of Japan “opens spigot” to the rich, wsws

The Japanese economy slowed markedly in the final quarter of 2013, pointing to an unraveling of Prime Minister Shinzo Abe’s much-vaunted “Abenomics.” Statistics released last week revealed that GDP grew by only 0.3 percent (1.2 percent annualised) for the quarter—less than half the expected 0.7 percent. Overall growth for 2013 was just 1.6 percent. The slowdown reflected weakening exports, private consumption and corporate capital spending.
After coming to office in December 2012, Abe proclaimed that his economic policy, dubbed Abenomics, had three “arrows.” The first was an unprecedented monetary easing policy to double Japan’s monetary base over 21 months, from its initiation in April 2013. As with the US “quantitative easing” program, the Bank of Japan (BOJ) pumps 60 to 70 trillion yen ($US585 to $680 billion) annually into the economy, mainly through government bond-buying. The central bank is aiming to achieve 2 percent inflation and end more than a decade of deflation. The second “arrow” involved a modest stimulus spending program.
The final “arrow” consisted of anti-working class “structural reforms.” These are yet to be announced in detail, but the general aim is to further dismantle job security and undermine wages and working conditions while cutting corporate taxes. At the World Economic Forum last month in Davos, Abe indicated that this was in store when he boasted of carrying out pro-market reforms previously thought impossible. A “new dawn [is]... breaking over Japan,” he declared, promising that “companies ... will find Japan among the most business-friendly places in the world.”

3---Abenomics Rout Makes Stocks Cheapest Versus Bonds, Bloomberg

Abe has yet to take new pro-growth steps even as the economy faces the sharpest quarterly contraction in three years after a sales-tax increase

4---Japan’s GDP back to peak levels: Auto sales and Toyota benefit , market realist

5---Japan bond market liquidity dries up as BOJ holding hits 200 trln yen, Reuters

6--The Greek economy lies in ruins, RT

The Greek economy lies in ruins. After six years (yes, six years!) of depression, 27.5 percent of the workforce, and some 58.3 percent of youth, are unemployed. Over a quarter of the economy (26 percent) has been destroyed on the sacrificial altar of saving the flawed euro, spurring Athens’ lost decade. True, unemployment peaked nearer to 30 percent, but the economy can barely be said to be recovering with gusto… Well, unless you belong to the curious ‘troika’ tribe who promised rescue loans. Rather, their austere prescription delivered damnation

7---US-backed crackdown threatens civil war in Ukraine, wsws

US and European support for the crackdown makes clear that their intervention in Ukraine is not motivated by concerns for Ukrainians’ democratic rights. From the outset it has been aimed at inciting a civil war in Ukraine and producing a confrontation with Russia. Having organized a fascist-led coup in Kiev, Washington, Berlin and Brussels are now denouncing the inevitable opposition of people in eastern Ukraine as a Russian plot, and using this lie to escalate the violence....

Washington is fully supporting this military operation backed by fascist thugs, which threatens the lives of countless thousands of civilians in eastern Ukraine.
White House spokesman Jay Carney signaled Washington’s support for the crackdown. After cynically declaring that the United States “agreed that the use of force is not a preferred option,” he proceeded to endorse the violent attack on protesters. “That said, the Ukrainian government has a responsibility,” he declared, “to provide law and order, and these provocations in eastern Ukraine are creating a situation in which the government has to respond. Ukraine has proceeded with great caution, has for days now been offering amnesty, dialogue, has been trying to resolve these conflicts peacefully.”

Carney made clear that the operation was directly planned and is now being carried out under the auspices of the Obama White House and the Central Intelligence Agency, whose director, John Brennan, traveled to Kiev this past weekend.
Asked what Brennan and other US officials told security forces in Kiev, Carney replied bluntly: “We urged the Ukrainian government to move forward, gradually, responsibly, and with all due caution, as it deals with this situation caused by armed militants… Let’s be clear: the way to ensure that violence does not occur is for these armed paramilitary groups, and these armed so-called pro-Russian separatists, to vacate the buildings and to lay down their arms.”

Carney’s praise of the Kiev regime’s “responsibility” and “due caution” as helicopter gunships were firing on the population and tanks were massing around major cities is a repulsive lie.
General Vasily Krutov—the first deputy head of the Ukrainian Security Service (SBU), who is leading the operation—summed up the policy Brennan and other US officials undoubtedly discussed with their stooges in Kiev. Krutov threatened to “destroy” anti-government activists, stating: “They must be warned; if they do not lay down their arms, they will be destroyed.”.

8---Bye Bye Bandar, ahram

9---Let’s not follow Harper’s tough talk on Crimea crisis , spirit de corps

Following the March 16 referendum in which the ethnic Russian majority voted for Crimea to become part of Russia, Ukrainian soldiers were offered the choice of returning to the mainland or changing their uniforms to join a Russian military force in the Crimea.
Only 11 per cent chose to remain in the Ukrainian military while an astonishing 89 per cent chose to volunteer for the Russian military. Again, without a shot fired, Ukrainian navy vessels hauled down their yellow and blue flags and happily hoisted the red, white and blue Russian flag up their masts

10--Special Report: How the Fed fueled an explosion in subprime auto loans, Reuters archive
 11--Subprime Loans Are Boosting Car Sales, Bloomberg

....according to Bloomberg, three-month rolling US auto sales are now only about 3% off their pre-crisis levels. On the other hand, US labour force participation is down to 63% while duration of unemployment remains fairly high.

So, if the country’s labour force participation is at its lowest level since 1978, how can car sales be very nearly back to their boom-year levels? The answer would seem to lie in the ease with which almost anyone in the US can obtain a loan to buy a car – with a great example of this detailed in the Bloomberg Business Week article
Subprime loans are boosting car sales

12---About That “Surge” In March Retail Sales , Testosterone Pit

Nevertheless, the Wall Street talking heads can’t help themselves with the constant ridiculous refrain that the consumer is back, and it's soon off the races:
The linchpin of economic growth, the consumer, is back,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi.
Oh, really. Real wage and salary income is only 2% above its level 73 months ago when the economy last peaked. And after a salutary rebound in the savings rate during the Great Recession, the household savings rate has been drawn down to its unsustainable bubble lows. But pettifoggers like Rupkey just keep pouring the Kool-Aid.

So the Fed sponsored Wall Street bubble inflates to its final asymptote. When the inevitable bust occurs, it will trigger a sharp retrenchment in business inventories, investment and consumer spending, but  the usual suspects will say it's time to restart the Keynesian Clock. That being the one that is now permanently broken but never acknowledged by our rulers in the Wall Street-Washington corridor — who long ago threw sound money and the laws of economics to the winds in a desperate attempt to hang on to ill-gotten power and wealth.

In any event, in
today’s post by Jeffrey Snider, it is evident that we just had winter; that the three month retail spending average including the ballyhooed March bounce was the second weakest of this century, and that the fifth annual spring time leap into “escape velocity” is nowhere in sight.

13---Russian lawmaker calls Kiev's 'anti-terrorist operation' extremely cynical, Itar Tass

Speaker of the Federation Council's upper house of Russia's parliament Valentina Matviyenko has reiterated that Russia is insisting on a peaceful settlement of the Ukrainian crisis. Matviyenko said Kiev's decision to start an 'anti-terrorist operation' in the east of the country was extremely cynical.
"Russia has always called for peaceful ways of settlement, and Ukrainian national dialogue, and heeding regions' opinion and civilians' demands," Matviyenko said, adding that the decision by incumbent Ukrainian authorities to use force and start 'anti-terrorist operation' against the civilian population and unarmed persons in the east was extremely cynical.

The Federation Council speaker underlined that Moscow was trying to use all possible platforms to launch dialogue. However, she regretted the absence of response in the issue. Two weeks ago, the Federation Council had invited Ukrainian parliament speaker Oleksandr Turchynov and the Ukrainian delegation to participate in the session of the Parliamentary Assembly of the Commonwealth of Independent States due to take place in St. Petersburg later this week, in order to use this platform for dialogue, the search or peaceful solution and deescalation.

14---The "Housing Recovery" Is Complete: Major US Banks' Mortgage Originations Tumble To Record Low, zero hedge

15--Secular stagnation, the movie, econ view

16---The Housing “Recovery”, House of Debt
April 16, 2014
New housing starts for March are out today. Rather than focus on the short-term movements, it’s worth looking at the long run. Here is the graph from

It’s really quite an amazing graph. We are now five full years from the end of the recession (if you buy NBER dating). And housing starts are still below any level we’ve seen since the early 1990s!
So who out there thinks we are ever going to get back to the 1.5 million annualized rate? When?
It may be time to start taking seriously the idea that the boost to the economy from new residential construction in the long-run may be much lower than it was in the 10 years prior to the Great Recession. The anomaly is not the weakness now, but the strength in the late 1990s and early 2000s.

March’s bond issuance was the second lowest since the early 2000′s

March’s mortgage bond issuance was the second lowest since the early 2000’s, according to the latest Securitization Weekly report from Bank of America (BAC).
March saw only $54 billion in mortgage bonds issued, the smallest amount since the inception of the third round of quantitative easing.
The absence of the first-time homebuyer flags a secular shift reflective of lower affordability and tight lending standards,” Bank of America’s report states. …
With home prices on the rise and lending standards tightening, first-time homebuyers represent less than 28% of the market, down from a 36% market share in May 2011, the analysts state.

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