Saturday, April 30, 2016

Today's links

1--Savings Rate Highest Since December 2012 After Personal Spending Disappoints Again

Income up, Spending down.....Savings rises to 5.4%...another sign of weak consumption

2--Oil prices: tripwire for disaster?

Energy could be the tripwire because low oil prices heighten the likelihood of a credit event. It looks a lot like the housing problem in 2007. At that time people said: «Housing never goes down, and if it goes down it’s a buying opportunity. Don’t worry about this stuff, it’s all going to work itself out.» Today, crude oil prices are very important for financial markets. If we get a plunge in crude oil prices then that’s bad, as it means the bankruptcies come, the write downs come, investors run away and losses pile up. And then we’re back looking at financial institutions and asking ourselves: How much of those energy loans do they have? The banks will tell you that they’re not exposed and there’s no problem – just like in 2007, when they claimed that they had no exposure to subprime lending. But that wasn’t quite the way it worked out. So maybe we have to do the whole exercise again that we had to do during the financial crisis and listing out all the write downs of the banks.....

The Bank for International Settlements estimates that there are about 3 trillion dollars worth of energy lending world wide. So we’ve got a market of 3 trillion dollars worth of loans and the primary pricing of that market has fallen apart: the world wide price of oil. And the price doesn’t even need to go down much lower. It just needs to go back down to around $35 and we’re going to start looking at those 3 trillion dollars worth of lending and all of the investments in oil. And if investors see how much it really is, it’s going to be bad.

If the markets are understanding that they got a veto over the Fed then they can do what they want. This runs the risk that stocks take off to overvalued range, go to immense multiples, go bubble because investors don’t believe that this Fed would ever step on the breaks. That is the concern that I have because I am still not a believer that the economy is doing well. Of course, Wall Street’s job is to torture the data to find something positive out of it. But I see negative year-over-year earnings, I see the forecast for the next couple of earnings seasons with negative year-over-year earnings growth, I see sub 1% growth in the US economy and I see low expected inflation. Except for the payroll reports, there is no consistency that things look robust.

3--Why this Economy Feels Even Lousier than the Lousy GDP Print

The meme that 14 million jobs have been created since the Great Recession is constantly held up as proof that the labor market has healed, or has practically healed, even if there are a few soft spots left over – such as the pandemic lousiness of the jobs that have been created.

Turns out, the US population, currently at 323.2 million, has grown by 16.5 million people since the Great Recession. Which is exactly why the unemployment problem has become so intractable: job growth has been less than population growth!...

Per-capita economic growth in the first quarter compared to the prior quarter was negative 0.3%!

4--The Commies were right about Sanders--The demise of Sanders’ “political revolution”

In the wake of his losses in five out of six northeastern primaries, Vermont Senator Bernie Sanders has effectively conceded that former Secretary of State Hillary Clinton will be the Democratic nominee. On Wednesday, the Sanders campaign issued layoff notices to several hundred staffers.
In a series of media interviews, Sanders and his top campaign aide Tad Devine indicated that the
candidate would bow to demands from leading Democrats that he stop criticizing the frontrunner for her ties to Wall Street, and instead direct his attacks against the likely Republican nominee, billionaire Donald Trump.

Thus the Sanders campaign ends not with a bang, but a whimper. The candidate has every right, however, to declare “mission accomplished.” His main concern, as the campaign developed, was how to keep his supporters within the Democratic Party. Millions of youth and workers attracted by calls for a “political revolution” and denunciations of the “billionaire class” are now to be dragged to the polls to cast their votes for Clinton, a Wall Street lackey and war criminal...

A Harvard University survey of young adults aged 18 to 29, made public this week, found that 51 percent of those surveyed did not support capitalism, compared to 42 percent who did. One-third of these young adults affirmatively supported socialism, and near-majorities agreed that health care, food and shelter were basic human rights. This is in a society where socialism has been virtually criminalized and both major parties, the media and academia all sing the praises of the profit system.

As the WSWS wrote in February, “Sanders is not the representative of a working class movement. He is rather the temporary beneficiary of a rising tide of popular opposition that is passing through only its initial stages of social and class differentiation.” His entire campaign has been dedicated to preventing this leftward movement from breaking out of the straitjacket of the Democratic Party.....

His “political revolution” turned out to be nothing more than getting out the vote for the Democrats, his “socialism” merely warmed-over liberalism, without the slightest threat of any inroad against capitalist property.
Sanders avoided the overriding issues of war and militarism, on which Clinton was most vulnerable given her role as secretary of state in the Obama administration, responsible for the US-NATO war in Libya, the US-instigated civil war in Syria, and the campaign of drone missile assassinations, among other crimes....

The class character of the Democratic Party is not open to question. It is an integral component of the two-party system, which the American ruling elite employs to manage its affairs of state and to suppress all opposition from below.

Throughout the election campaign, the Socialist Equality Party has explained both the objective significance of the mass support for Sanders and the role of the candidate himself as a vehicle for strengthening the Democratic Party. We have stressed that Sanders was not the leader of a movement from below, but an instrument of the political establishment for containing, misdirecting and ultimately dispersing that movement.

5--Abenomics—-At Last, Dead In The Water

6--What Comes Next——Krugman’s Fiscal Equivalent Of War

7--Chart Of The Day: Japan’s Money Multiplier Has Dropped Like A Stone Since Kuroda Went Wild

8--Chart Of The Day: Constant Dollar New Home Sales Still At 1976 Level

9--Letter Details FBI Plan for Secretive Anti-Radicalization Committees

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