Friday, October 3, 2014

Today's Links

"For change to come, Americans will have to make America stop acting like it owns the world.  The world is not America’s to do with as it pleases.  To the extent it ever was, it is no more." Andrew Levine

1---When Bad News Becomes Bad News" - Albert Edwards Presents His "Second Most Important Chart To Investors", zero hedge

2---Peak Housing 2.0 - Mark Hanson Warns This Bubble Correction Could Be A "Doozy", zero hedge

3---US Home Prices Are Rolling Over (in one Chart) wolf street

4--Is Canada Next? Housing Bubble Threatens ‘Financial Stability’ , wolf street

5---Last Time this Happened, the Housing Market Crashed , wolf street

Whatever the timing, the USA, China and Europe are all headed for another Minsky moment: the point in debt inflation where the cash generated by assets is insufficient to service the debt taken on to acquire the asset. The US productivity growth last year was +0.36%. The real growth per capita was about 1.5%. Anything which is not productivity is consumption of capital. So, the only way to grow an economy without productivity growth is temporarily with the use of debt – about 75% debt and 25% productivity growth in this case.

... what is more disturbing is that the people not in the labor force, rose to a new record high, increasing by 315,000 to 92.6 million!

In August, real wages per worker were down 2.6% from a year ago. This is the 14th consecutive month of a year-on-year decline in real wages. While nominal wages are up 1.6%, mostly due to overtime, bonuses and the like, this is hardly enough to keep up with price hikes and the tax hike.”

For Sheard, thinking for BoJ, it remains a“Catch 22” situation: “For deflation to end, wages will need to go up, but if firms give wage rises in anticipation of inflation, their profits will be squeezed. On the other hand, if prices go up first, real wages will go down, which sounds good for firms but squeezes workers and might make it less likely that they will expect the strong economy necessary to convince them to change their expectations for inflation in the future. On top of that, the consumption tax hikes exacerbate the real wage compression.” Which is what Katz describes.

The yen’s drop since Abe started his campaign to become prime minister helped fuel a 23 percent gain in the benchmark Nikkei 225 stock average in 2012, followed by a 57 percent surge last year, the biggest annual gain since 1972.....

Japan’s gross domestic product shrank an annualized 7.1 percent in the April-to-June quarter, the most since the first quarter of 2009. The economy is projected to have rebounded last quarter, posting growth of 3.4 percent, according to the median estimate in an independent survey....That rebound would be threatened should the yen drop further, adding to the risk of returning to recession, said a former BOJ deputy governor.

The weakening yen is starting to squeeze Japanese consumers as prices rise for everything from Burgundy wine to instant noodles, threatening Prime Minister Shinzo Abe’s plans to revive the economy.
The currency slid to ¥110 to the dollar on Oct. 1, the lowest level in six years, making imported goods and materials more expensive. Though inflation is one of Abe’s monetary goals, the’s yen’s sharp slide undermines steps to boost consumer spending and endangers public backing for his economic program.

“When I go to the supermarket now, I hesitate to buy things like cheese, as it’s gotten so expensive,” said Akiharu Katsuta, 40, a call-center employee in Tokyo.
The success of Abe’s plans for a sustained economic recovery after two decades of stagnation depends on consumers, since they account for about 60 percent of gross domestic product. They have turned cautious as the sales tax rose and companies, including many that profited from the weaker yen, failed to raise wages enough to keep up with inflation.

Supermarket sales fell for a fifth straight month in August, following an April jump in the consumption tax to 8 percent from 5 percent. Wages adjusted for inflation fell 2.6 percent in August from a year earlier, the 14th straight monthly decline, the labor ministry reported....

“I’m definitely not happy about the weaker yen,” said Mikiko Kudoh, an office worker in Tokyo.
Consumers like Kudoh add to pressure on Abe, who must decide whether to raise Japan’s sales tax to 10 percent as planned next year. The increase this April plunged the economy into its deepest contraction in five years as the government tries to cap gains in the developed world’s highest debt burden.
Japan’s biggest employers, including Toyota Motor Corp., Hitachi Ltd. and Panasonic Corp., have benefited from the yen’s drop. A weaker currency makes their exports more competitive and increases the value of overseas earnings when converted into yen. Japanese companies’ pretax profit rose to a record ¥17.5 trillion ($161 billion) in the quarter ended March 31, data from the Finance Ministry showed.

12--Blame them! Biden blames US allies for ISIS, RT

“Our allies in the region were our largest problem in Syria,” he said, explaining that Turkey, Saudi Arabia and the UAE were “so determined to take down Assad,” that in a sense they started a “proxy Sunni-Shia war” by pouring “hundreds of millions of dollars and tens of thousands of tons of weapons” towards anyone who would fight against Assad.

“And we could not convince our colleagues to stop supplying them,” said Biden, thus disassociating the US from unleashing the civil war in Syria.
“The outcome of such a policy now is more visible,” he said, as it turned out they supplied extremists from Al-Nusra Front and Al-Qaeda.

13--Biden Says US Forced EU Countries to Impose Sanctions Against Russia, ria novosti

14---Marines in Kuwait; Turkey joins US coalition---New steps to wider war in Middle East, wsws

While the Obama administration has sought to use the crimes of ISIS, such as the beheading of prisoners and the slaughter of minority religious groups, to sway public opinion in the United States, US allies like Saudi Arabia and the other Gulf despotisms have made it clear that they are mainly concerned with overthrowing Assad.
The latest recruit to the US-led “coalition,” the Turkish government of President Recep Tayyip Erdogan, was even more explicit about this goal, as the Turkish parliament voted Thursday for a measure to allow Turkish troops to enter Iraq and Syria and to permit foreign troops to use Turkish territory.
The new law would allow Turkish troops to create a buffer zone inside Syria to prevent refugees from crossing the border. It would also allow the US to use its airbase at Incirlik, near the Syria-Turkish border, to launch airstrikes against targets in both Syria and Iraq.

15---Ending ISIL threat, toppling al-Assad regime Hurriyet 

He also accused the “parallel state,” a term used to describe officials in the state apparatus loyal to U.S.-based Islamic scholar Fethullah Gülen, of attempting to “destroy legitimate and democratic politics.”

“The New Turkey will never give credit to autonomous structures, gangs or mafia-like organizations within the state. Any attempt of such gangs to gain power, particular within the judiciary, or any attempts to design the judiciary and the whole of society will never be tolerated,” he vowed.....

“We will fight effectively against both ISIL and all other terrorist organizations in the region; this will always be our priority. At the same time, it will also be our priority that the refugees whose number has already exceeded 1.5 million in Turkey return to their country or are able to live safely in their country. Again, we will continue to prioritize our aim to remove the Syrian regime, to help protect the territorial integrity of Syria, and to encourage a constitutional, parliamentary system that embraces all the citizens in the country,” he added....

Erdoğan described Turkey as a “great state” taking the initiatives in crises. “Turkey cannot be content with the current situation and cannot be a by-stander and spectator in the face of such developments. Turkey has risen to a position in which it is a playmaker, takes the initiative, struggles for peace and solidarity; Turkey is aware of its responsibilities and knows fully well that it has to take its goals further,” he said.

‘Objective’ attitude on 1915 incidents

He also emphasized that this year is the 100th anniversary of the First World War, a conflict that precipitated the collapse of the Ottoman Empire and led to the establishment of the Turkish Republic.

“Turkey cannot be indifferent to developments while the region where it is located is being reshaped and transformed after 100 years ... We stand against all forms of discrimination not only inside the country, but in the world as well. We adopt a totally humane, consistent attitude towards countries like Egypt, where the democratic demands of citizens are oppressed with methods supported by a military coup. We fight against all types of violence regardless of who is exposed to it, or who practices it. We adopt a totally objective, constructive and consistent attitude which is in favor of peace regarding the Cyprus issue, the termination of the occupation in the Azerbaijani territories, relations between Turkey and Armenia, and the 1915 incidents,” he said, referring to the massacres of Ottoman Armenians, which many historians say amounted to genocide.

Turkey will not allow coalition members to use its military bases or its territory in the fight against the Islamic State of Iraq and the Levant (ISIL) if the objective does not also include ousting the Bashar al-Assad regime, President Recep Tayyip Erdoğan hinted on Oct. 1. His words came just a day before Parliament is set to vote on a mandate to allow the deployment of foreign troops on Turkish soil.

“We will never tolerate any terrorist organizations in our lands, in our region or indeed in the world. We are open and ready for any cooperation in the fight against terrorism. However, it should be understood by everybody that Turkey is not a country in pursuit of temporary solutions, nor will Turkey allow others to take advantage of it,” Erdoğan said in his lengthy address to Parliament on the occasion of the opening of the new legislative year.

His message was directed at the U.S.-led international coalition that was recently formed to destroy the ISIL militants in Iraq and Syria. The coalition is pressing Turkey for an efficient contribution to the fight, including opening its military bases, its airspace and pledging training and logistical support to moderate Syrian rebels. Turkey, however, stresses that the campaign should not be limited to the ISIL and should also target regime change in Syria.

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