Saturday, January 30, 2016

Today's links

1--Subprime, again?

The report explained, “credit standards are becoming more accommodating to meet market demand.”

Of course. We knew that. We figured that out during the last subprime fiasco. And so the inevitable: “The industry is also seeing an increase in subprime activity within the home equity market.”...

2--This is a great moment for the US housing market

The Fed has finally healed it. We’re back to our old tricks. Home prices have been inflated to crazy levels in many cities. And now everyone is once again certain that you can’t lose money in real estate, that home prices will always go up, and that at worst, there might be a “plateau” for a few months. Forgotten are the lessons, bank collapses, bailouts, and shenanigans of just a few years ago.

Economists are once again hoping that consumers – prime and subprime borrowers alike – will use their inflated home prices as miracle ATMs, to extract the home price increases via HELOCs, home equity installment loans, and refis, and that they spend this money quickly before the next housing crash comes along and pulls the rug out from under all of it.

3---Already Lousy Corporate Investment Comes Totally Unglued

Note the mini-boom from October 2013 to September 2014, when capital goods orders hit an all-time peak of $73.9 billion, and when hope began to circulate that businesses would finally invest again, that the drought was over. But then it all came unglued, and investment in capital goods has since plunged 11%....

Years of QE and ZIRP, instead of generating a tsunami of investment in productive activities, and thus economic growth, have pushed financial engineering – share buybacks and M&A – to new levels that have left corporate America more leveraged, more fragile, and more financially unstable than ever before. As companies are starting to grapple with the consequences of their financial engineering strategies in this environment, business investment is going to be relegated to an afterthought. And this will be a further whack-down for the already limping economy.

4---Oversold Oil Markets Rally On Rumors Of OPEC Cut

Oil prices surged this week on speculation that Russian and OPEC might work together to stabilize markets through coordinated production cuts. The latest developments are confusing due to conflicting statements from officials from both sides. Russia’s energy minister said that the country would consider a proposal of a 5 percent production cut, but would wait to discuss the option with OPEC in February. At the same time, top OPEC officials dismissed the speculation. Other Russian officials also downplayed the possibility of a production cut. The markets did not care – WTI and Brent surged to $34 per barrel by Friday, up nearly 10 percent for the week.

One worrying sign to keep an eye on: the fundamentals. The EIA reported a sharp uptick in crude oil inventories this week, breaking a new all-time high. U.S. oil in storage has now reached 494.9 million barrels, surpassing the previous record set in April 2015.

5---Chinese Slowdown and the World Economy

6--Bank of Japan's negative rates are 'economic kamikaze'

7--Americans Thrive, Companies Dive, Bloomberg

Consumer spending grew last year by the most since 2005, in spite of a slight slackening in the fourth quarter. Nonresidential business investment, meanwhile, rose at its slowest pace since 2010 as oil and gas companies sharply curtailed spending.

8--All sides should drop preconditions for Syria talks: Russia

9--The Guardian view on the geopolitics of falling oil prices

The oil shocks of the 1970s reshaped the global landscape and lent new significance to the Middle East. When prices collapsed in the mid-1980s, the Soviet Union’s final demise owed much to the collapse in its export revenues. Saddam Hussein’s 1990 invasion of Kuwait derived in part from an ambition to capture new lands at a time of financial stringency. In Algeria, another country dependent on oil revenues, that same price collapse – which reduced the price of crude to below $10 a barrel – contributed to an election victory for Islamists, then a coup, and then civil war. All of this makes it difficult to draw clearcut conclusions about strategic winners and losers. Of course, the liberal democracies of the west benefited from the end of the Soviet bloc, but it is hard to argue that low oil prices in the Arab and Muslim world led to much peace and stability....

if a falling oil price hurts those countries the west would view warmly, it also has the power to hurt those it would regard as adversaries. In Russia, Vladimir Putin appears determined to re-establish his nation as a major power through military adventurism on the European continent and in the Middle East. Now he will increasingly find himself confronted with a complex financial equation....

 nowhere are the geopolitical consequences of low oil prices more unpredictable than in the Middle East. For Saudi Arabia, orchestrating the price drop, it is a key factor that might weaken its regional rival Iran as the latter returns to the oil export market

(SEE for more:

10--- ‘the Democratic Party is the graveyard of social movements., Rob Urie

Any notion that governance in the broad public interest is achievable within the Democrat Party is delusional. The point in recounting Party history is to demonstrate both the continuity of the prevailing neoliberal / militarist (neoconservative) vision since the 1970s and the depth of its institutional support.....

Here is a selective restatement of more ignominious moments in recent Democrat history:

Bill Clinton entered office declaring a phony fiscal ‘emergency’ that he used to limit, and eventually cut, Federal social spending. Through ‘ending-welfare-as-we-know-it’ Mr. Clinton joined the Republican right to attack poor people through the claim that welfare represented the personal failings of welfare recipients rather than the social failure to create jobs. Mr. Clinton then used barely concealed racist appeals to pass ‘three-strikes, you’re out’ sentencing ‘reform’ that greatly exacerbated the human catastrophe of mass-incarceration. Mr. Clinton deregulated Wall Street thereby enhancing the destructive power of modern finance, he passed NAFTA after conservative Republicans had been unable to pass it on their own, murdered a few hundred thousand Iraqi children through punitive sanctions and he publicly supported George W. Bush’s catastrophic rush to war in 2003.

Barack Obama entered office in the midst of Republican plans to bail out Wall Street and the U.S. auto industry and he aggressively pursued the very worst of both. The automaker bailouts restored corrupt, incompetent management at full salaries plus bonuses while maintaining the tiered wages that paid newer autoworkers poverty wages. Although models existed for socially beneficial bank restructuring Mr. Obama chose the less effective and more corrupt route of fully restoring Wall Street bankers who then blamed their own misdeeds on ‘big government.’ Mr. Obama codified extra-judicial murders, expanded and then lied about government spying on citizens, launched and / or perpetuated right-wing coups in Ukraine and Honduras and undertook de-stabilizing ‘regime-change’ in Libya, Syria, Yemen and Somalia. And Mr. Obama’s TPP and TTIP ‘trade’ agreements are a final step toward realizing total corporate control over civil governance....

Mr. Obama then impaneled a bi-partisan committee to develop plans to cut Social Security and Medicare. To be clear, it was Mr. Obama’s stated goal, his desire, to cut Social Security, it wasn’t a compromise.

To the issue of the ACA (Affordable Care Act), a/k/a Obamacare (1) health insurance isn’t health care

11--Syrian army advances towards Turkish border (cutting off critical supplylines)

12--Wall Street celebrates mounting signs of US slump

For the broad mass of the population, economic stagnation and slowdown mean a further descent into economic distress, unemployment and outright poverty. The recent developments explode the claims of economic “recovery” and confirm that the destruction of decent-paying jobs, pensions and social services that followed the Wall Street crash of 2008 is not a temporary condition, but only the beginning of a permanent and escalating attack on working class living standards.

For the financial aristocracy, on the other hand, the signs of slump are welcome indicators that the Federal Reserve will continue to pump trillions of dollars into the financial markets, delaying further interest rate increases and perhaps rolling back the initial increase it imposed in December. Bankers and hedge fund speculators were rubbing their hands on Friday in anticipation of still more cheap credit to underwrite their parasitic financial operations.

The euphoria on Wall Street was a demonstration of the essential character of what the government and media call economic “recovery.” Just over two weeks ago, President Obama in his State of the Union address praised the economic “surge” that had made the US economy “the strongest, most durable… in the world,” and said claims “America’s economy is in decline” were a “fiction.”

13--Japan moves to negative interest rates

14--Washington to escalate US Mideast wars

Read more here:

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