Wednesday, June 17, 2015

Today's Links

Today's quote:  The only ones getting a free ride from the Fed’s zero interest rate policy (are) the Wall Street banks...who live off the carcasses of the dying middle class...

An economy built upon the consumption of iGadgets, Cheetos, meat lovers stuffed crust pizza, and slave labor.... is doomed to fail

1--Aren't rates supposed to rise in a normal recovery?
Dwindling GDP:
Well, one can debate whether the US economy is strengthening, especially when one considers that in reality quite the opposite is taking place...

... confirmed recently by none other than Goldman which last month cut its long-term potential growth rate for the US by half a percent from 2.25% to 1.75%.

2--Some Troubling Numbers From The CBO

The Fed and Feds can talk about recovery all they want. But it’s just talk. If the US was truly in recovery, interest rates would be rising.


Remember the 6.5% unemployment rate bogey set by Bernanke in January 2013? Unemployment dropped below 6.5% in early 2014 on its way to 5.5% today. Did they raise rates? In 2013 we had two consecutive quarters of 4% GDP growth, with no Fed rate increase. In 2014 we had two consecutive quarters of 4.8% GDP growth, with no Fed rate increase. We have added ten million jobs and the stock market has tripled since 2009, with no Fed rate increase.
We are supposedly in the sixth year of an economic recovery and the Fed is still keeping the discount rate at a Lehman “world is ending” emergency level of .25%. Six years after the last recession the discount rate was 5.25%. The last time the unemployment rate was this low the discount rate was 4%. The only ones getting a free ride from the Fed’s zero interest rate policy and QE to infinity have been Wall Street banks, the .1% who live off the carcasses of the dying middle class...

In 1980 consumer credit outstanding as a percentage of personal income totaled 15%. Today it totals 22%, an all-time high. It is higher than the bubble peak in 2007-2008. Real per capita disposable income has only risen by 88% over the last 35 years. Meanwhile, real per capita consumer debt has risen by 288%. Wages and earnings from saving have been replaced by debt...

Boomers are entering their retirement years with $12,000 in retirement savings, while still in debt up to their eyeballs. There have been 10,000 Boomers turning 65 every day since 2010. This will continue unabated through 2029. This demographic certainty was already depressing consumer spending, as this age demographic spends far less than 25 to 54 year olds. Factor in the pitiful amount of savings and you have an ongoing spending implosion...

, the savings rate actually reached 1.9% in 2005, as the masses all believed they would live luxurious retirements off their home equity windfall. How’d that delusion work out? The current level of 5.6% is seen as troublesome by the powers that be. They cannot accept the crazy concept of saving and investment when their entire warped paradigm is built upon borrowing and consumption. Banks don’t make money when you save and they despise when you use cash. They can’t sustain their opulent lifestyles without their 3% VIG on every electronic transaction, 15% compounded interest on the $5,000 average credit card balance, billions in late fees for being one day late with your payment, $4 on every ATM transaction, and the myriad of other fees and surcharges designed to bilk you and keep you from saving. The saving rate will continue to climb as people have no choice to make up for years of living beyond their means....

We have an over-indebted, under-employed youth who don’t have anything to spend. And lastly we have the 25 to 54 year old age bracket who should be in their prime earning and spending years who are still 4 million jobs short of where they were in 2007 before the Fed induced financial collapse. The only age bracket to gain jobs since the crisis has been 55 to 69, as they have been forced to work to make up for their lost interest income. The only people making job gains are those least likely to spend....

The spending crescendo in 2004 through 2007 was fueled by the Greenspan housing bubble and the $3 trillion of mortgage equity withdrawal used to buy BMWs, in-ground Olympic size pools, Jacuzzis, vacations to Tahiti, home theaters, granite countertops, stainless steel appliances, and boob jobs, by delusional, apparently brain dead Americans who fell for the Bernaysian propaganda spewed by the Wall Street criminal class, hook line and sinker...

Pompous, arrogant, egocentric assholes who write for the Wall Street Journal, run JP Morgan, or control monetary policy for the world, know exactly what they have done, what they are doing, and who is benefiting. We all know the benefits of ZIRP and QE have gone only to the .1% who run the show. We know income inequality is at all-time highs. We know TPP will be passed, because the corporate fascists control the purse strings of our political class. We know the status quo will be maintained at all costs by the Deep State.....

They might not have us figured out, but a growing number of critical thinking, increasingly pissed off people, have them figured out. The debt expansion days are numbered. A deflationary depression is in the offing. The coming civil strife, financial panic, war, and overthrow of the existing social order will rival the three previous tumultuous upheavals in U.S. history – American Revolution, Civil War, Great Depression/World War II. Fourth Turnings are a bitch.

Hopefully I’ve explained the situation to the satisfaction of Jon and Janet. The mood in this country is darkening by the day. There is no going back to the good old days of yesteryear. They are long gone. No amount of debt issuance and propaganda is going to work. The system is overloaded. The people are angry. The politicians are captured. The banking elite are ransacking the nation for every last dime they can get their grubby little hands on. The military industrial complex is itching for war with Russia and China. The world hates us. If you can’t see it coming, you are either blind, dumb, or an Ivy League educated economist. So go out and spend to make your slave owners happy.

4--Life in Ukraine Since the U.S. Coup There in Feb. 2014 eric zuesse

This is all true, the US-backed fascist regime turned life for ordinary people here in Ukraine to real hell. With the collapse of local currency 3-fold over one year and all prices skyrocketing into universe the overwhelming majority of population is on the verge of starvation. Corruption is hitting all time highs and still we are forced to serve combat military service to defend this fascist regime. Only three options available: either paying a bribe of up to usd 3000 so they fake you incapable for military services, going on a military service with a high chance of being injured or killed in combat or facing a prison term of up to 8 years. This is what the american-style democracy has brougth to Ukraine. As an american writer once wrote, anglo-american expansion brings debt and death.

5--US backed coup tips Ukraine into depression ....we've become more like Europe's Somalia."

When Ukrainians toppled a pro-Russian president last year, nowhere was the euphoria greater than in Lviv, a short drive from the EU border, where people have dreamt for generations of escaping Moscow's orbit to join the West.
More than a year of war and economic collapse later, nowhere else has the disillusionment been felt more harshly.
"Everyone thought Ukraine would suddenly turn into Poland," said mechanic Taras Yakubovsky, sitting by a cast-iron woodburner in his small garage, where work has dried up because customers can no longer afford car repairs. "But we've become more like Europe's Somalia."

6---attitudes toward NATO obligations have evolved within member countries. In a new Pew poll, when asked “If Russia got into a serious military conflict with one of its neighboring countries that is our NATO ally, do you think our country should or should not use military force to defend that country?” majorities in three of the most important European allies — Germany, France, and Italy — responded “should not.”
This amounts to a repudiation of the Article Five obligation to consider an armed attack against any one member state as an attack against all. In the poll, Americans expressed the most intent to live up to that obligation, with 56 percent saying “should.” But 37 percent of American respondents said “should not.” In light of such alliance-wide attitudes, it is fair to ask what NATO stands for today.

7--Shanghai Containerized Freight Index Totally Collapses, Top Carriers Wage Price War to Form Global Shipping Oligopoly

8---Time to Fire Mary Jo White: SEC Covers Up for Bank Capital Accounting Scam Promoted by Her Former Firm, Debevoise

Pam Martens and Russ Martens published a mind-boggling expose yesterday on how the SEC is refusing to stop an abuse by major banks that increases systemic risk. Large banks are continuing to fake their capital levels, via a ruse called a “capital relief trade” with hedge and pension funds. And Mary Jo White, the chairman of the SEC, is aware of this practice, which undermines the safety and soundness of financial institutions, and has done squat about it.
White is not just head of the SEC but also a member of the Financial Stability Oversight Council. She is undermining it and financial reform generally by her failure to take on this practice. Pam Martens and Russ Martens also charge the SEC chairman and her director of enforcement, Andrew Ceresney, with cronyism, since they both hail from the law firm Debevoise, which is an active player in this practice.

As much as there has been considerable consternation over Mary Jo White’s numerous lapses, like hiding behind the need for more data as an excuse for doing nothing about high frequency trading, her failure to secure more admissions of wrongdoing in SEC settlements, and her refusal to comply with Dodd Frank by virtue of too freely issuing waivers for mandatory sanctions, even to recidivist bad actors, this dereliction of duty is considerably more serious, because it increases systemic risk in a direct, tangible way.* Remember that technically permissible balance sheet fakery at Lehman, also known as Repo 105, allowed it to mask how sick it was

9---Anonymous backs new encrypted social network to rival Facebook

10--UN doing nothing to stop Saudi aggression on Yemen: Hamza al-Houthi

11---US signals first ever U-turn on Iran sanctions

Secretary of State John Kerry has acknowledged for the first time that a final nuclear deal would not require Iran to detail its past activities in order to lift sanctions on the country. 
“We’re not fixated on Iran specifically accounting for what they did at one point in time or another,” he said by video from Boston where he is recuperating from a broken leg.
"We know what they did," Kerry added. "We have no doubt. We have absolute knowledge with respect to the certain military activities they are engaged in. What we are concerned about is going forward."
Economic sanctions lie at the heart of nuclear negotiations between Iran and the P5+1 group of countries.

U.S. and European officials had previously signaled to maintain sanctions as long as the International Atomic Energy Agency had not issued a clean bill of health for Iran’s nuclear program.
Tehran has made it clear that it would not settle for anything short of complete removal of sanctions if a final deal were to be signed.
Iran is also cooperating with the IAEA and has pledged to clarify everything about what the West calls military dimensions of the country’s nuclear activities in the past.
Kerry said, “The possible military dimensions, frankly, gets distorted a little bit in some of the discussion.”
Iran says it is nuclear activities are purely civilian, aimed at generating electricity. Years of scouring of the country by IAEA inspectors, meanwhile, has not produced any trace of diversion.
IAEA chief Yukio Amana again verified non-diversion of Iran’s nuclear program in the latest report this month, though sticking to the agency's usual political line that it could not provide assurances about possible undeclared material.

12---US Air Force may deploy F-22 warplanes near Russia's border

13--Can China Contain America?  The US wants to provide security for the asia pacfic.
They'd be better off hiring Jack the Ripper

Last week Obama went to Beijing for the Asian Pacific Economic Cooperation (APEC) summit as the representative of the West and its centuries old grand project in East Asia. And what has that project been? History tells us that the West with its missionaries and soldiers, Obama’s predecessors, bathed the region in suffering and bloodshed. A short and incomplete list includes: the Opium Wars on China, the war on the Philippines, the nuclear bombing of Japan, the Korean and Vietnam wars, the bombings that laid waste Laos and Cambodia, the bloody CIA coup in Indonesia, and the military assault on the Korean movement to overthrow the Park dictatorship

14---Greek Debt Committee Just Declared All Debt To The Troika "Illegal, Illegitimate, And Odious"
People’s dignity is worth more than illegal, illegitimate, odious and unsustainable debt
Hooray for that

15---All retirees’ security is thus at risk when the massive overvaluation in fixed income and equity markets eventually rights itself."

16--Chinese non intervention: A thing of the past?

As President Xi Jinping’s “Silk Road” program of trade routes gets under way, with infrastructure projects planned across Central Asia, the Indian Ocean and the Middle East to Europe, China’s footprint abroad will expand from the $108 billion that firms invested abroad in 2013, up from less than $3 billion a decade earlier.
That is forcing China to take a more proactive approach to securing its interests and the safety of its people. With more engagement abroad there’s a risk that China, an emerging power with a military to match, is sucked into conflicts and runs up against the U.S. when tensions are already flaring over China’s disputed claims in the South China Sea.
“It is going to be a long, hard haul,” said Kerry Brown, director of the University of Sydney’s China Studies Centre. “You either have disruption as a new power rips up the rule book and causes bedlam or you’ve got a gradual transition where China is ceded more space but also expected to have more responsibility.”

17--The IMF “Defense” of it Actions against the Greeks is an Unintended Confession
As we (UMKC economists and NEP bloggers) and Paul Krugman have explained repeatedly, the fiscal response to a Great Recession does not require “difficult decisions” and “sacrifices.” It requires funding worthwhile projects that provide an enormous “win-win” for the nations suffering from the Great Recession – and it helps their neighbors’ economies. Germany’s economy would be much stronger today if it had not insisted on forcing Greece, Spain, and Italy into Great Depressions. Because of the inherently flawed structure of the euro, this requires the ECB to be used far more aggressively than was contemplated by its inept architects, but it can be done. It would be an awkward, inelegant, bastardized system, but the problem in getting it done isn’t the economics, it’s the toxic interconnection of politics, economic dogmas spread by the troika and the credulous media, and disdain of the EU core for the peoples of the EU periphery that pose the insuperable problems.

18--Russia cuts US debt holding by more than 40% over year "we don't need no stinking T-Bills"

19--Putin responds to US buildup in E Europe

While US officials claim that the positioning of weapons is meant only to facilitate military training exercises, a logical interpretation of the deployment of arms to these countries is that the US and its NATO allies are preparing to launch a war against Russia. For its part, the Putin regime is responding accordingly, shoring up its military forces and making its own preparations for war by whipping up reactionary Russian nationalism...

Since the collapse of the Soviet Union in 1991 NATO has been working to build a solid military bloc on Russia’s western border. The Czech Republic, Hungary and Poland joined in 1999; the Baltic states, Bulgaria, Slovakia, Slovenia and Romania in 2004; and Albania and Croatia in 2009. The fascist-led coup in Ukraine last year, backed by the US and Germany, was aimed at pulling that country out of Russia’s sphere of influence and towards the West. The far-right puppet government has dropped Ukraine’s non-aligned status, adopted in 2010, and is moving towards NATO member status.
With the US in the lead, NATO is already engaging in provocative military exercises all along Russia’s western border from the Arctic Ocean to the Black Sea. Numerous “near-miss” encounters between NATO naval vessels and aircraft and Russian aircraft have been reported in recent months. In February US armored personnel carriers were paraded in the Estonian city of Narva, just a few hundred yards from the Russian border.
With the growing buildup of US and NATO forces in Eastern Europe, one misstep by either side could spark a conflict between the two largest nuclear-armed powers on the planet, which would devastate the planet.

20--Why Anti-Keynesian Views Survive'
Simon Wren-Lewis:
Speak for yourself, or why anti-Keynesian views survive:
The evidence for the Keynesian worldview is very mixed. Most economists come down in favor or against it because of their prior ideological beliefs. Krugman is a Keynesian because he wants bigger government. I’m an anti-Keynesian because I want smaller government.
Statements like this tell us rather a lot about those who make them. As statements about why people hold macroeconomic views they are wide of the mark. Of course there is confirmation bias, and ideological bias, but as the term ‘bias’ suggests, it does not mean that evidence has no impact on the views of the majority of academics.
The big/small government idea makes no theoretical sense. Why would wanting a larger state make someone a Keynesian? Many Keynesians, and most New Keynesians, nowadays acknowledge that monetary policy should be used to manage demand when it can. They also know that any fiscal stimulus only works, or at least works best, if it involves temporary increases in government spending. So being a Keynesian is not a very effective way of getting a larger state.
It is also obviously false empirically. ...

21-- Pro west Kiev wants to de-industrialise the land

did much more than it was permitted by the Empire. He crossed red lines in his internal policies by banning Western companies from buying Russian resources; he crossed the red line in his foreign policy while protecting Syria and securing Crimea. He began to re-industrialise Russia, produce wheat and buy Chinese goods bypassing dollar. He limited power of oligarchs.

...The Kiev regime could use this reluctance of Putin and broker a good stable peace. But their sponsors want war. The breakaway Donbass was the power engine of all the Ukraine. The new regime is keen to de-industrialise the land: industrial workers and engineers speak Russian and relate to the Soviet Union and to Russia its heir, while Ukrainian-speakers and supporters of the regime are mainly small farmers or shopkeepers. This is a standard fare of ex-USSR: de-industrialisation is the weapon of choice for pro-Western regimes from Tajikistan to Latvia. Of Russia, too: the first thing carried out by pro-Western reformers in Gorbachev and Yeltsin’s days was de-industrialisation. It is said that Obama’s Transatlantic Free Trade Area (TAFTA) will de-industrialise Germany and France. Thus industrial Donbass has good reasons resisting its inclusion in the Ukraine, unless this will be a federated state leaving much of its authority to the provinces. Kiev prefers war depopulating the region

22---Pentagon's Carter sides with Israel on Iran nukes issue?

Ashton Carter, who shares Israel and the Gulf States’ concerns about Iran becoming a nuclear threshold state with breakout capabilities measured in months, knows the nitty-gritty of the Iranian program and argued against letting Iran having nuclear capabilities. In fact, in the past, Carter called for the use or threat of force to prevent Iran from obtaining nuclear weapons.

As the White House is more or less blocking the access of top Israeli government officials to the administration when it comes to the Iran nuclear file, Israel can leverage its excellent relations with the Pentagon to try to highlight, address and close key loopholes in the proposed agreement, while working with an expert on the topic who has not been involved in the negotiation but whose voice the president is very likely to take into consideration. Ash Carter’s realistic and pragmatic view on how the Middle East and the world will look after a deal with Iran will not be ignored by President Barack Obama. It is not too late to do so.

23---More bad news on the economy
24--The US Has no Diplomatic Capability nor Intent
In a piece titled "Too Quick on the Draw: Militarism and the Malpractice of Diplomacy in America," former ambassador Charles Freeman lays out the history of the abandonment not only of diplomatic intentions by the US, but also of diplomatic capability. He details what the loss of educated, capable, professional diplomats has done to US foreign policy, which now has to rely entirely on threats and force because our so-called diplomats do not know what diplomacy is for, nor how it is accomplished.
In one pity statement --
"Diplomacy, as such, is not part of civic education in the United States. A large percentage of our political elite has no idea what diplomats do, can do, or ought to do. Not for nothing is it said that if you speak three or more languages, you are multilingual. If you speak two languages, you are bilingual. If you speak only one language, you are American. And if you speak only one language, have never studied geography, and do not have a passport, you are probably a member of Congress."

25---Back to the US:
I see no sign of whatsoever of accelerating credit growth:...Mosler

26--Ashton Carter: Absent Iran nuclear deal, military option will ‘remain on the table’

26--Saudis prepare to go nuclear--What could go wrong?



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