Saturday, June 7, 2014

Today's Links

Today's quote:  "What's the point of having this superb military... if we can't use it?", former Secretary of State, Madeline Albright

1---The Scariest Chart Ever Is Dead, BI
We've recovered all the lost jobs. It took a preposterously long time, but this chart is over.

2---No, the jobs market is not back to normal, Bloomberg
Employment to population ratio is off by 4.6 million.

3--A small team of American military advisers will soon head to Ukraine to assess that embattled nation's "mid- and long-term needs for defense reform," a Pentagon official said Thursday., USA Today

4---IEA Says the Party’s Over, post carbon

The International Energy Agency has just released a new special report called “World Energy Investment Outlook” that should send policy makers screaming and running for the exits—if they are willing to read between the lines and view the report in the context of current financial and geopolitical trends. This is how the press agency UPI begins its summary:
It will require $48 trillion in investments through 2035 to meet the world’s growing energy needs, the International Energy Agency said Tuesday from Paris. IEA Executive Director Maria van der Hoeven said in a statement the reliability and sustainability of future energy supplies depends on a high level of investment. “But this won’t materialize unless there are credible policy frameworks in place as well as stable access to long-term sources of finance,” she said. “Neither of these conditions should be taken for granted.”

5---Geithner is at heart a grifter, a petty con artist with the right manners and breeding to lie at the top echelons of American finance at a moment when the government and financial services industry needed someone to be the face of their multi-trillion dollar three card monte. He’s going to make his money, now that he’s done living his life of fantastic power after his upbringing of remarkable mysterious privilege. After reading this book and documenting lie after lie after lie, I’m convinced that there’s more here than just a self-serving corrupt official. There’s an entire culture, of figures at Treasury, the Federal Reserve, in the entire Democratic Party elite structure, and in the world of journalism, a culture in which Geithner is seen as some sort of role model.

 - From Matt Stoller’s fantastic article published yesterday, The Con-Artist Wing of the Democratic Party

6---Housing Tracker Existing Home Inventory up 10.5% year-over-year on June 2nd  oc housing

7---U.S. consumer credit surges in April, marketwatch

WASHINGTON (MarketWatch) — U.S. consumer credit growth jumped in April to its fastest pace in almost three years, the Federal Reserve reported Friday. U.S. consumers increased their debt in April by a seasonally adjusted $26.8 billion. The debt increase in April is well above Wall Street expectations of a $15 billion gain. Monthly debt rose at a 10.2% annual rate in April, compared with a 7.5% rate in the prior month. This is the strongest rate since July 2011. Non-revolving category of debt, especially federal student loans, stayed strong, rising $18.0 billion or 9.5% in April following a 9.1% gain in March. The biggest surprise was credit-card debt, which surged $8.8 billion in April or 12.3%. This is the highest annual rate of credit-card debt since November 2001.

8---Half of Americans can’t afford their house, yahoo

As the housing market slowly recovers, a majority of homeowners and renters are finding it hard to meet rising rents and mortgage payments, new research finds.
Over half of Americans (52%) have had to make at least one major sacrifice in order to cover their rent or mortgage over the last three years, according to the “How Housing Matters Survey,” which was commissioned by the nonprofit John D. and Catherine T. MacArthur Foundation and carried out by Hart Research Associates. These sacrifices include getting a second job, deferring saving for retirement, cutting back on health care, running up credit card debt, or even moving to a less safe neighborhood or one with worse schools.

9-Falling mortgage rates aren’t enticing home buyers, latest data show, marketwatch

Upsetting expectations from a Nobel Prize winner, as well as the world’s No. 1 central banker, it looks like borrowers aren’t clamoring to buy homes in the face of low and falling mortgage rates.
In late May, Nobel Prize-winning economist and home-price expert Robert Shiller said drops in mortgage rates could stimulate the housing market. “These declines matter. People are watching mortgage rates,” he said.
At that time, the average rate for a 30-year fixed rate mortgage was about 4.14%. Since then the rate has ticked down to 4.12%, the lowest reading since the end of October. During 2014, the rate has shed four-tenths of a percentage point.
But borrowers aren’t rushing to take advantage. Since the beginning of the year, applications for mortgages to buy a home have actually slightly declined, dropping less than one percent, according to a gauge from the Mortgage Bankers Association released Wednesday

10---Draghi's miracle, Testosterone Pit

Since July 2011, earnings have been falling!

And that, despite quarter after quarter of Wall-Street forecasts of dizzying earnings growth for future quarters that then get whittled down to nothing!

As of May 30, according to data provided by FactSet, the Stoxx 600 had EPS of 23.67. That’s down 0.7% from a year ago, and down 11.2% from July 2011. These miraculous European companies that make up this gravity-defying index and that have been trumpeted by Wall Street with such conviction are making less now than they did three years ago during the depth of the Eurozone debt crisis!

This has been Draghi’s great success, aided and abetted by Wall Street: pumping up European stocks (and bonds, including Greek government bonds, and all manner of other crappy assets) while corporate earnings have been declining – for nearly three years!

11--Because Keynesian Money Printing Works So Well: Japan’s Real Wages Down Most In 4-Years; Misery Index Highest Since 1981 , stockman's corner

12--Say hello to rising housing inventory in Southern California: Year-over-year inventory is up 26 percent in Los Angeles and 30 percent in Ventura., Dr Housing Bubble
So let us take a quick look as to why the market suddenly seems to be so different:
sales and inventory
So much for the notion that the market is blistering hot. What you have is a heavily manipulated market where inventory was leaked out, large investors dominated buying, and fringe buyers were convinced that high prices are merely a new paradigm. If everyone that bought a home was a genius we wouldn’t have a graveyard of more than 7,000,000+ foreclosures. Take a look at the growth in inventory:

-Los Angeles (up 27 percent)
-Riverside (up 26 percent)
-Ventura (up 30 percent)
-San Diego (up 22 percent)
Take a look at investor central Phoenix with a whopping 42 percent jump in inventory on a year-over-year basis. If you want to get an idea of a market with a glut of rentals take a look at Arizona. Then again, these investors were planning their exit route via selling to one another similar to a game of musical chairs. Wiser investors are already placing their bets on the other side of the housing trade...

Inventory is picking up because regular households are massively priced out! This is why we are hearing nonsense talk about weakening lending standards and edging back into non-prime goodness. It is worth taking another look at the craziness of SoCal real estate since 2000:
13---Private Jobs Have Recovered. Government Jobs Still Lag, NYT

The federal deficit today is at a level many economists consider manageable. And the recent cuts in government jobs stand in stark contrast to the government’s expansion in the wake of the recessions in the 1980s and 1990s.
If the government hadn’t done so much cutting over the last several years, the job market would almost certainly be healthier today.

14--The employment to population ratio for workers between the ages of 25-54 is down by 3.5 percentage points from its pre-recession level, Dean Baker

Actually, the story of people leaving the labor force is not primarily one of older workers who are near retirement age, it is primarily a story of prime age workers. According to data from the OECD, the employment to population ratio for workers between the ages of 25-54 is down by 3.5 percentage points from its pre-recession level. For workers between the ages of 55-64 it is only down by 0.9 percentage points.
It is difficult to envision any obvious reason why people in their prime working years would suddenly decide that they did not want to work other than the weakness of the labor market. Most of these workers will presumably come back into the labor market if they see opportunities for employment.

15---Froth Alert, sober look

High yield bond spreads have declined to new post-recession lows, with the latest spread tightening driven by yesterday's ECB's easing. Bond holders are simply not being compensated for the risk they take.

3. Similarly, corporate credit default swap spreads are falling as well

16---Le Pen makes sense, RT

Le Pen says she is personally opposed to any expansion of the EU, and would not wish the bloc’s troubles on a country as economically deprived as Ukraine.
“I am sympathetic to Ukrainians, and therefore wouldn’t wish to invite friends to this table of nightmares. I myself want to get out of the EU, so I will not say to them: ‘Come on into the EU,’” she said.
The EU has lost control of its foreign policy to Washington, France's National Front leader Marine Le Pen told RT, calling the bloc's diplomacy a “catastrophe” in which no independent voice of reason could be heard.
“The European Union's diplomacy is a catastrophe,” Le Pen told RT's Sophie Shevardnadze in an exclusive interview to be broadcast Monday. “The EU speaks out on foreign affairs either to create problems, or to make them worse.”
Where Ukraine is concerned, Le Pen believes that Europe had no right to blackmail the country into breaking up its historical and cultural ties to Russia.

“When offering a partnership agreement to Ukraine – which would mean breaking off of its allied relations with Russia – the EU has clearly set blackmail in motion. And that can't help but fuel dissent inside the country,” Le Pen told RT, adding that “pouring oil onto the fire” could lead to an increasing risk of a civil war.
“The EU has been doing nothing but making the situation worse using threats, blackmail and sanctions, which, as we can see now, clearly do not encourage anyone to sit at the negotiation table in order to come up with a peaceful and reasonable solution to the conflict...

We've made a great deal of foreign policy mistakes under Washington's influence, but the worst of them is Syria,” Le Penn said.
There are “no independent states left in Europe” that would call for peaceful solutions to conflicts, the National Front leader says.
“We [National Front] have been the only party to stand against the option of intervening in Syria. When the crisis first started, we said France is supplying arms to jihadists, who would spread terror if they win. That's what already happened in Libya.”
“That's the way the US acts in the international arena. But what is even more horrible, is that one can't hear the voices of European countries,” Le Pen added.

17---From December 2007 to the present, including five years of a so-called “recovery” that officially began in June 2009, there has been virtually no net gain in the total number of payroll jobs in the United States. Over that period, the number of working-age Americans has increased by some 15 million., wsws

According to the EPI, the US economy is still 7.1 million jobs shy of the number it would need for the employment-to-population to reach its pre-recession level...

The fact that it has taken six-and-a half years to replace the millions of jobs lost in the recession is, in reality, a measure of the depth of a crisis that continues to undermine the wages and living standards of tens of millions of Americans.

The Economic Policy Institute (EPI), a Washington think tank, estimates that the number of “missing workers,” i.e., people who would either be working or looking for work if the job market was stronger, was 5,950,000 in May, and that the official unemployment rate would be 9.7 percent if these people had been looking for work.
A more accurate measure of the employment situation than either raw payroll figures or the official jobless rate is the labor force participation rate (the share of the population aged 16 and older either employed or actively looking for work). That figure remained at 62.8 percent in May, its lowest level in 36 years...

Moreover, the payroll figures and official jobless rate mask the rising proportion of part-time, temporary and low-wage jobs in the overall labor market. According to the Labor Department, 9.8 million people were unemployed in May. This compares to 7.6 million unemployed in January 2008, when the jobless rate was a far lower 4.9 percent....

Unemployment among African Americans and Latinos remained disastrously high (11.5 percent and 7.7 percent respectively), the rate actually rising 0.4 percentage points for Latinos. The rate for younger workers also went up, increasing by 0.5 percentage points to 11.1 percent.
Another stark measure of the depth of the job crisis and resulting social crisis is long-term unemployment. More than a third (34.6 percent) of the 9.8 million people officially counted as unemployed—3.4 million people—have been looking for a job for 27 weeks or longer.

In his response to the jobs report, Labor Secretary Perez hypocritically pointed to the 3.4 million long-term unemployed, noted that federal benefits for the long-term jobless were allowed to lapse five months ago, and criticized Congress for failing to renew them. He neglected to mention that the Obama White House and congressional Democrats doomed the emergency benefits program to extinction when they refused to make its extension a condition for passing a bipartisan budget deal at the end of 2013.

18---Tepid employment report masks depth of US jobs crisis, wsws

19--Wealth report shows deepening social polarization in US, wsws

Stock buybacks by non-financial corporations occurred at an annual pace of $427 billion in the first quarter, according to the Fed).
A new report from the US Federal Reserve Board finds that total US net worth has risen to a record $81.8 trillion, up $1.5 trillion in the first quarter of 2014 and up nearly $13 trillion compared to the previous peak, before the 2008 financial crash.

This figure belies the incessant claims by the US political and financial elite that there is “no money” to pay for basic social necessities—from jobs and decent wages to schools and other public services. There are ample resources—more than at any time in history—but these resources are monopolized by the narrow layer of ultra-wealthy individuals at the top of American society.

If the $81.8 trillion were divided equally among the 318 million people who live in the United States, there would be just over $250,000 for every man, woman and child. Poverty would be virtually abolished at a stroke. Hunger, homelessness and other forms of social deprivation would be dealt a death-blow.

But under capitalism, a social order based on profit and the accumulation of vast private wealth, such an equal division of society’s resources is unthinkable. Instead, America in 2014 is a spectacle of ever-increasing riches at the top and steadily worsening conditions of life for the majority of the population...

According to figures published by Redfin, a real estate group, from January through April 2014, sales of the top 1 percent of US homes, those priced at $1.67 million or more, have risen 21 percent, while sales of the remaining 99 percent of homes have fallen 7.6 percent.
Meanwhile, because of the wave of foreclosures and because young workers can no longer afford to buy their first homes, the home ownership rate in the United States has fallen from its peak of 68.9 percent in 2006 to 64.8 percent, about the same as it was in 1965.

The Financial Times, which published the Redfin figures, noted similar trends in consumer sales: Sales by luxury retailers such as LVMH (Louis Vuitton, Bulgari) and Tiffany rose by 9 percent; sales by retailers with mainly working class customers declined. Walmart was down 5 percent, Sears’ sales fell by 6.8 percent. At the lower end, only cut-rate outlets where more and more Americans must shop to stretch their dollars saw increased sales. Dollar Tree, the largest such retailer, recorded a sales increase of 7.2 percent.

The Financial Times noted that household wealth is up 43 percent since the depths of the economic slump in 2008, despite the slow or nonexistent recovery in the labor market and an actual decline in median household income, down 7.6 percent since 2008.
The newspaper observed, “The gains show the effectiveness of policy in recreating the wealth lost in the recession, but its effect in boosting the economy is limited, because much of the benefit has gone to wealthy households that own stocks and large houses… The disconnect between the real economy and markets continues to grow

20--D-Day anniversary: Commemorating the Second World War and preparing the Third, wsws

This found explicit expression Friday in a column published in the influential German newspaper Die Zeit entitled “Europe needs to readjust its relations with the US.” The article warns that, “neither the US policy towards Ukraine and Russia nor America’s grand strategy as such is in Europe’s interest.”
It goes on to argue that Washington’s aggression is laying the foundations for a Chinese-Russian-Iranian axis that “would force the West to pursue a more aggressive foreign policy [i.e., war] to secure its access to important but dwindling raw materials such as oil.” In opposition to this, the commentary insists that Germany’s independent interests lie “with preserving and deepening Europe’s relations with Russia,” while pursuing similar ties with Iran.

the Soviet Union, which by the time of the Normandy invasion had already inflicted a strategic defeat on the Wehrmacht at Stalingrad. The Red Army was responsible for 80 percent of the casualties inflicted on German forces, and the Soviet people suffered 26 million dead in the war.

Perhaps the most bizarre part of Obama’s speech was his attempt to equate the war fought by the aged veterans brought together in Normandy with the “post-9/11” US military and its wars in Afghanistan and Iraq. He predicted that someday “future generations… will gather at places like this to honor them—and to say that these were generations of men and women who proved once again that the United States of America is and will remain the greatest force for freedom the world has ever known.”

What “freedom” did the US bring in wars that killed over a million Iraqis and Afghans? And at what places will future generations gather to mark these wars—Fallujah, Abu Ghraib, Haditha, Bagram prison or the scenes of countless drone strikes, bombings and night raids against civilian populations...

World War II, nonetheless, was no more a war for democracy or crusade against fascism than World War I was the “war to end all wars,” or, for that matter, the invasion of Iraq was a struggle against terrorism. In the period leading up to the war, major capitalist interests in Western Europe and the US lauded both Hitler and Mussolini, seeing their fascist dictatorships as bulwarks against socialist revolution.
In the end, it was an imperialist war waged by the rival capitalist great powers for the re-division of the world’s markets and resources in the profit interests of financial and manufacturing conglomerates.

In 1934, analyzing the emerging contradictions that, without the spread of socialist revolution, would inevitably give rise to another World War, Leon Trotsky wrote: “US capitalism is up against the same problems that pushed Germany in 1914 on the path of war. The world is divided? It must be redivided. For Germany it was a question of ‘organizing Europe.’ The United States must ‘organize’ the world. History is bringing humanity face to face with the volcanic eruption of American imperialism.”
The prescience of these words is becoming clearer with every passing day. While US imperialism succeeded in reorganizing the capitalist world in the aftermath of World War II based on its economic strength, today it is driven by its crisis to resort to military means in an attempt to overcome its loss of economic power

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