Monday, April 21, 2014

Today's Links

1---Retail Store Closures Soar In 2014: At Highest Pace Since Lehman Collapse, zero hedge

From Credit Suisse's Michael Exstein

Since the start of 2014, retailers have announced the closure of more than 2,400 units, amounting to 22.6 million square feet, more than double the closures at this point in 2013 ..... We expect this trend to continue as Office Depot evaluates its real estate in the wake of its merger with OfficeMax. Even dollar stores and drug stores, which combined have consistently built out hundreds of stores per year, are beginning to reel back on expansion, with Family Dollar and Walgreens both planning to shutter  underperforming stores.

2---Is This What a Credit Bubble Looks Like?, zero hedge

There’s been some buzz recently about a pick-up in business lending. The six largest banks increased business loans at an average annual rate of 8.5% in the first quarter, according to a Wall Street Journal report last week. Other first quarter data reported by the Fed shows commercial and industrial loans jumping 12% from last year. Charles Schwab’s chief strategist went so far as to call a chart depicting the Fed’s broader lending data “the most important chart in the world.”

Unlike some pundits, though, we’re not convinced that a surge in business credit is such a good thing. We don’t doubt that more lending to small businesses, in particular, might do some good if it doesn’t go too far. Lending to large corporations, on the other hand, is a different story. Corporations are already borrowing at a pace that’s only before been seen near cyclical peaks:

debt to asset 1

At over 4% of GDP, you might say that borrowing is too high, not too low, especially as this pace never lasts long. The bigger issue, though, is that companies are choosing not to invest borrowed funds back into their businesses. You may have seen recent posts by David Stockman or Tyler Durden, breaking down financial statements for IBM, in particular. They showed that IBM’s borrowing in recent years was matched almost exactly by stock buybacks. Clearly, this isn’t the kind of borrowing that helps the real economy, and IBM’s not alone.

3---Americans Continue to Enjoy Saving More Than Spending, Gallup
Gap largest among lower-income Americans and Southerners

WASHINGTON, D.C. -- The majority of Americans continue to enjoy saving money more than spending it, by 62% to 34%. The 2014 saving-spending gap is the one of the widest since Gallup began tracking Americans' preferences in 2001
Trend: Americans' Enjoyment of Saving and Spending
These results are from Gallup's April 3-6 Economy and Personal Finance poll...
The majority of Americans continue to report enjoying saving more than spending. However, this trend is not necessarily indicative of actual behavior. While the number of Americans to report greater enjoyment of saving has been increasing in recent years, so has personal consumption. Although Americans, since 2009, have been significantly more likely to enjoy saving, or perhaps more likely to feel guilty about spending, their views have not been evident in their real-world behavior.

This disconnection between desired state and actual behavior could have significant implications.
On a macro level, economists would typically view increases in personal consumption as a positive sign of an improving economy. But if the increases in spending are occurring out of necessity, not desire, and Americans take on more debt or deplete their savings, the picture may not be quite as rosy. Data from the U.S. Department of Commerce show that the 2013 average personal savings rate was 4.5%, the lowest since 2007 and low historically. The U.S. average personal savings rate in the 1970s was 11.8%, 9.3% in the 1980s, and 6.7% in the 1990s.

Stagnant wage growth and the overall sluggish recovery from the Great Recession perhaps have contributed to decreasing personal savings. While Gallup data indicate a stronger preference to save than to spend, in reality Americans seem to be having difficulty putting together a safety net. This has more than likely contributed to the lingering pessimism about the U.S. economy.

4--Is America an Oligarchy?, New Yorker

5---Japan’s Trade Deficit Widens as Export Growth Weakens: Economy , Bloomberg

6---Blame Robert Rubin for the GFC, guardian

Wall Street deregulation pushed by Clinton advisers, documents reveal
Previously restricted papers reveal attempts to rush president to support act, later blamed for deepening banking crisis

Wall Street deregulation, blamed for deepening the banking crisis, was aggressively pushed by advisers to Bill Clinton who have also been at the heart of current White House policy-making, according to newly disclosed documents from his presidential library.
The previously restricted papers reveal two separate attempts, in 1995 and 1997, to hurry Clinton into supporting a repeal of the Depression-era Glass Steagall Act and allow investment banks, insurers and retail banks to merge.

7--The state of mortgage lending, wsj

8---Risk of Stock Pullback Continues , wsj

9--Banks Cling to Bundles Holding Risk, NYT

Recall that the Volcker Rule was intended to bar banks with insured deposits from making large and risky trading bets. The rule was lawmakers’ attempt to reinstate some of the taxpayer protections lost when Congress gutted the Glass-Steagall Act in 1999.....

Mr. Volcker is right. Issuance of these instruments, strong last year, is even stronger now. Through April 16, over $32 billion in C.L.O.s have been issued this year, up from $29 billion during the same period last year, according to S&P Capital Insight’s Leveraged Commentary & Data. In March, issuance of C.L.O.s was the highest in any month since 2007 and April is on track to being the biggest month ever....

Their big bank brethren do, however. Regulatory filings from year-end 2013 show that 52 banks held an estimated $81 billion in C.L.O.s. Small institutions, those with less than $50 billion in assets, held only $5.4 billion, the filings show. By contrast, JPMorgan Chase, Wells Fargo and Citibank held almost $60 billion altogether, or three-quarters of the total.....

Some $431 billion worth of C.L.O.s are currently outstanding, according to the most recent figures from the Securities Industry and Financial Markets Association. Roughly $150 billion worth were issued before 2009. That group represents the riskiest securities in the asset class, regulators say. Another $150 billion in C.L.O.s, issued after 2009, contain fewer problematic assets; those remaining, raised after the pending Volcker Rule restrictions had been announced, are viewed by regulators as the least risky of all.

Insurance companies, pension funds and foreign banks own most C.L.O.s. But large United States banks hold an estimated $75 billion worth, and would have to divest many of them under the Volcker Rule. Being forced to sell these holdings is what the banks find objectionable.
Under the rule, banks are not allowed to have ownership stakes or relationships with hedge funds or private equity firms. Many C.L.O.s are issued and overseen by hedge funds and private equity firms, though, making C.L.O.s just the kind of trading vehicles the Volcker Rule intended to exorcise from bank balance sheets.

10---Amateur Hour In Ukraine, smirking chimp

it’s also worth recalling past efforts to weaken Russia by detaching Ukraine, its most important center of agriculture and coal. In 1917, after the collapse of the Romanov dynasty, Russia sued for peace. The result was the rapacious Treaty of Brest-Litowsk in which the Germany and Austria stripped away Ukraine, parts of today’s Romania, and the Baltic states from Russian control.

Ukraine was briefly independent during the 1920’s Russian civil war. Stalin crushed Ukraine’s independent farmers, murdering 6-7 million in a 1930’s holocaust. To no surprise, invading German troops were greeted as liberators by many Ukrainians. But Hitler decided to turn Ukraine into Germany’s granary and its people into serfs.

The US and NATO are now trying to impose a second Brest-Litowsk on Russia. Without Ukraine, Russia can not return to being a world power. Stalin undid Brest-Litowsk. Vlad Putin is determined that the punitive eastern version of the “Versailles Treaty” will not be again imposed on Mother Russia. Pity the poor Ukrainians caught between the crushing millstones of East and West.

11--Ukraine's Neo-Nazi Imperative, smirking chimp

The new role for the neo-Nazi militias was announced last week by Andriy Parubiy, head of the Ukrainian National Security Council, who declared on Twitter, “Reserve unit of National Guard formed #Maidan Self-defense volunteers was sent to the front line this morning.”

Parubiy is himself a well-known neo-Nazi, who founded the Social-National Party of Ukraine in 1991. The party blended radical Ukrainian nationalism with neo-Nazi symbols. Parubiy also formed a paramilitary spinoff, the Patriots of Ukraine, and defended the awarding of the title, “Hero of Ukraine,” to World War II Nazi collaborator Stepan Bandera, whose own paramilitary forces exterminated thousands of Jews and Poles in pursuit of a racially pure Ukraine.

In the hasty structuring of the post-coup government in February, part of the compromise with the ascendant neo-Nazis was to give them control of four ministries, including Parubiy in the key position heading national security. To give him loyal and motivated forces to strike at the pro-Russian east, he incorporated many of the storm troopers from his Maidan force into the National Guard....

But Kristof appears to be readying his New York Times readers to support the violent crushing of the popular resistance in eastern Ukraine, which was President Yanukovych’s political base. Kristof is a renowned R2Per, urging a “responsibility to protect” civilians from government force, but his sense of responsibility appears to be highly selective, fitting with his favored geopolitical priorities.
More broadly, the U.S. news media’s hiding of Ukraine’s neo-Nazis has become a near obsession, indeed, done in greater uniformity across the mainstream press and even much of the blogosphere than the misguided consensus on Iraq’s WMD in 2002-03 that led to the disastrous Iraq War.

From a purely news point of view, you might think the inclusion of Nazis in a European government for the first time since World War II might make for a good story. But that would go against the preferred American narrative that the protesters in the Maidan were peaceful and idealistic – and that they were set upon by the evil Yanukovych who simply fled because he could no longer withstand their moral pressure.
Left out of this narrative is that Yanukovych signed an agreement on Feb. 21 brokered by three European governments in which he agreed to reduce his powers, accept early elections to vote him out of office, and – most fatefully – pull back the police. It was then that the neo-Nazi militias, from western Ukraine and organized in 100-man brigades, attacked the few remaining police, seized government buildings and sent Yanukovych and many of his officials fleeing for their lives.

12--Japan March trade deficit jumps 300% to record $14.1 bn, RT

13--Shootout in Slavyansk, wsws

On “Meet the Press,” Yatsenyuk called for a military escalation against Russia. “It’s crystal clear that Russia is the threat, the threat to the globe, and the threat to the European Union and the real threat to Ukraine,” he said. “[Russian President Vladimir] Putin has a dream to restore the Soviet Union,” Yatsenyuk continued, “and every day he goes further and further. And God knows where the final destination is.”
Pressed by NBC’s David Gregory to ask the Western powers to send weapons to bolster his regime’s armed forces, Yatsenyuk asked for help rebuilding Ukraine’s economy and military
This aggressive and provocative policy, centered on the standoff in eastern Ukraine between pro-Russian protesters and the military and fascist paramilitary forces of the unelected regime in Kiev, is inflaming tensions throughout Europe. Late Saturday and early Sunday, pro-regime forces attacked armed pro-Russian protesters who had set up roadblocks outside Slavyansk, killing at least one protester. A number of pro-regime fascists were also killed or wounded.

One of the pro-regime fighters killed in Slavyansk carried a badge of the fascist Right Sector militia, which led the February putsch that installed the current regime in Kiev.
“The personal belongings of a militant killed in the skirmish included a Right Sector badge number 20,” said Vyachaslav Ponomarev, the leader of Slavyansk’s pro-Russian forces. “Badge number one is held by [Right Sector leader Dmytro] Yarosh.”

A week ago, Yarosh called for the “total mobilization” of the Right Sector fascists to crush opposition to the Kiev regime....

Surveying US policy towards Russia, the New York Times wrote on Sunday: “Just as the United States resolved in the aftermath of World War II to counter the Soviet Union and its global ambitions, Mr. Obama is focused on isolating President Vladimir V. Putin’s Russia by cutting off its economic and political ties to the outside world, limiting its expansionist ambitions in its own neighborhood and effectively making it a pariah state.”

14---America’s hungry 21st Century, wsws
21 April 2014
Feeding America, the US national network of food banks, released its annual report on local food insecurity Thursday, showing that one in six Americans, including one in five children, did not have enough to eat at some point in 2012.
The report found that there are dozens of counties where more than a third of children do not get enough to eat. The incidence of hunger has grown dramatically. The percentage of households that are “food insecure” rose from 11.1 percent in 2007 to 16.0 percent in 2012.

15---Big Banks Ramp Up Business Lending, wsj
Increase Driven by Loosening Lending Standards

Banks are boosting their lending to businesses, providing fuel for companies to increase spending on workers and equipment as the economy improves.
The rise is being driven both by banks, which are loosening their lending standards, and companies, which are seeking more money, bank executives said.


» and Wells Fargo & Co., show a 8.3% increase in commercial loans outstanding in the first quarter from the same period a year earlier.
The results suggest companies are getting more confident about the economy after years of sluggish growth, and are anticipating interest rates might start to climb from rock-bottom levels.

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