Wednesday, October 26, 2016

Today's Quote:   "The illusion of freedom will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.”  Frank Zappa

"Trumps principle, and I think personal position, is leaning towards peaceful resolution of conflicts. Clinton's preference is clearly, as her history shows, escalation and general belligerence. It is too risky to vote for her.", Moon of Alabama

"Obama did not acknowledge that the ACA imposes no serious restraints on the insurance companies, pharmaceutical firms or hospital chains, and uses financial coercion to drive people to buy bare-bones plans with high out-of-pocket costs. Nor did he take note of the intensified assault on health benefits by employers, both private and public, across the US.

Obama boasted, “All told, about another 10 percent of the country now have coverage.” He was silent on the national scandal of 29 million Americans remaining uninsured." WSWS

1--Are today’s homebuyers considering the impact of rising mortgage rates?

Mortgage interest rates averaged less than 4% over the last 5 years, and many people believe this aberration is normal. Most people assume that either mortgage interest rates will remain low forever, or if rates rise, it won’t impact housing. While I agree that mortgage interest rates will likely remain very low for a very long time, I believe this because the impact of rising rates on housing would be huge, so it simply won’t be allowed to occur.

Belief in permanent, rapid home price appreciation

Homebuyers place too much faith in boundless home price appreciation. In my opinion, this creates four main problems:
  • buyers fail to recognize how much past appreciation was manufactured,
  • buyers neglect to consider their take-out buyer will not be as highly leveraged,
  • buyers underestimate the risk of future downturns, and
  • buyers distort their expectation of future appreciation...
The graph above illustrates the impact of 25 years of falling interest rates. Look carefully at the cost of ownership line. Notice that in 1989-1991, the monthly cost of ownership was about $1,900 per month at the peak of that housing bubble. In 2012, the cost of ownership was less than $1,900 per month. Twenty-four years apart, the cost of ownership on a monthly basis was lower, yet house prices were nearly double. Why is that? Because in 1989, mortgage interest rates were north of 10%, and in 2012, they were 3.5%.
All the appreciation from 1989 to 2012 was a direct result of declining interest rates. All of it....

By lowering mortgage rates, the federal reserve pulled-forward seven to ten years of appreciation. The market must endure seven to ten years of below average appreciation to balance the equation, or as a statistician would say, we must revert to the mean

2---Russia-Turkey Intelligence Sharing in Syria Signifies Major Changes in Relations

3--EU ratifies increased Gazprom use of key gas pipeline - WSJ

Victory for Gazprom

4--US-led offensive to defeat ISIS at Raqqa to ‘begin within

5--Fiction & Propaganda: US Announces (Again) Plans to Liberate Raqqa

It is enough strange that the US and its allies did not plan such large-scale operations until the strategic initiative in Syria has been on the side of terrorists and ‘moderate’ militants. Now the US imitates frenzied activity in order to add political points to the candidate from the Democratic Party before the elections. We can assume that in the near future the world will see footage, showing American and Iraqi soldiers, installing flags in Mosul… For this, it will be enough to take a video of some ‘liberated’ hut somewhere on the outskirts of Mosul, and then the ‘most honest’ Western media will start their work.

6--According to the pro-Western and pro-‘opposition’ monitor, the Syrian Observatory For Human Rights...the monitor says that 57% of the “rebel” victims were  foreigners. ...

Even according to the pro-‘opposition’ monitor, over a half of the ‘rebels’ are foreign mercenaries. Are these guys the same ‘locals opposing Assad’ that the West supports in Syria?

7--"Too risky" to vote for Clinton

U.S. Republican presidential nominee Donald Trump said on Tuesday that Democrat Hillary Clinton's plan for Syria would "lead to World War Three," because of the potential for conflict with military forces from nuclear-armed Russia.

In an interview focused largely on foreign policy, Trump said defeating Islamic State is a higher priority than persuading Syrian President Bashar al-Assad to step down,..
Trump questioned how Clinton would negotiate with Russian President Vladimir Putin after demonizing him; blamed President Barack Obama for a downturn in U.S. relations with the Philippines under its new president, Rodrigo Duterte;...

8--Clinton's plan to face Trump-- WikiLeaks Reveals DNC Elevated Trump to Help Clinton

According to an email from Marissa Astor, Clinton campaign manager Robby Mook’s assistant, to Clinton campaign chair John Podesta, the campaign knew Trump was going to run, and pushed his legitimacy as a candidate. WikiLeaks’ release shows that it was seen as in Clinton’s best interest to run against Trump in the general election. The memo, sent to the Democratic National Committee (DNC) also reveals the DNC and Clinton campaign were strategizing on behalf of their candidate at the very beginning of the primaries. “We think our goals mirror those of the DNC,” stated the memo, attached to the email under the title “muddying the waters.”

The memo named Trump, Sen. Ted Cruz, and Ben Carson as wanted candidates. “We need to be elevating the Pied Piper candidates so that they are leaders of the pack and tell the press to them seriously,” the memo noted.

Clinton was widely presumed to be the Democratic presidential nominee long before the primaries began. This assumption was held by the mainstream media and the Democratic Party leadership. Expecting Clinton to be the nominee, the DNC and Clinton campaign developed strategies for the general election

9--The Most Dangerous Place in the World: US Pours in Money, as Blood Flows in Honduras

10--Khadaffi's Murder, Margolis

11--Mosul offensive enters second week --objectives become clearer

CNN cited Sheikh Abdullah Alyawer, a tribal leader in the town of Rabia, on Iraq’s border with Syria, as saying that hundreds of ISIS fighters and their families have been pouring across the border at an ISIS-controlled crossing point at Ba’aaj, south of Sinjar.
The report appeared to confirm earlier charges from both the Syrian government and Moscow that the US and its allies had intentionally left open a corridor to the west of Mosul, a rat line to facilitate the transfer of the Islamist fighters into Syria in order to strengthen the flagging war for “regime change” initiated by Washington over five years ago....

Speaking to a meeting of defense ministers from 13 countries in Paris, French President Francois Hollande warned of the transfer of ISIS fighters from besieged Mosul to Raqqa in Syria. “In these columns of people leaving Mosul will be hiding terrorists who will try to go further, to Raqqa in particular,” he said.
Russia’s military command issued a statement on Tuesday that it was monitoring the Iraqi-Syrian border and had warplanes prepared to carry out airstrikes against ISIS forces attempting to escape. Such an intervention would cut across US objectives and again heighten the danger of a military confrontation between the two major nuclear powers.
In an editorial on the Mosul offensive, the Wall Street Journal Tuesday pointed to one of the principal objectives Washington is pursuing with its deployment of thousands of US troops in support of the campaign.

“Defeating Islamic State in Mosul is a vital U.S. interest, but the only way the next Administration will be able to prevent an Islamic State resurgence or Iranian domination of the region is a long-term U.S. deployment in Iraq of several thousand troops, both for political leverage with Iraq and other regional players and as a regional rapid-reaction force,” the editorial states. In other words, the battle for Mosul is only part of the preparations for far wider US wars in the Middle East and beyond....

In earlier offensives to drive ISIS out of the cities of Fallujah and Ramadi in Anbar province, hundreds of Sunni men were massacred and many faced torture at the hands of Iraqi government troops and Shia militias.
Meanwhile, in Kirkuk, the oil-rich city to the south of Mosul, efforts by the Kurdish Peshmerga militia to defeat ISIS fighters who launched attacks there last week to draw forces away from Mosul have reportedly led to acts of collective punishment against Kirkuk’s large Sunni Arab population.
The New York Times cited UN officials and local residents as reporting that Kurdish officials in Kirkuk “responded by forcing out hundreds of Arab families who had sought safety there.”

“Arab residents of Kirkuk who were interviewed on Tuesday reported that armed Kurdish security agents had removed families from homes and forced them to move to camps,” the Times reported. “They said several homes were also destroyed, in what appeared to be a methodical attempt to force out as many Arabs as possible.”
In Kirkuk, as in Mosul itself, the US-backed offensive is sowing the seeds for subsequent sectarian warfare with the potential of drawing in regional powers, including Turkey and Iran.

12--Government-enforced extortion--Government announces huge Obamacare premium rises for 2017

In a call with reporters on Monday, the Department of Health and Human Services (HHS) confirmed the 25 percent average price hike for the second cheapest (“silver”) plans, which are used as the benchmark to determine government subsidies. The dramatic increase compares to an average 7.5 percent premium hike in 2016 and a 2 percent rise in 2015. Average monthly increases are estimated at anywhere from $50 to $300.

In addition to the ACA premium hikes, HHS announced that more than one in five consumers using the site would have only one insurer to choose from in 2017. This is mainly the result of the pullout of insurance giants UnitedHealthcare, Humana and Aetna from the ACA marketplace over the past year. ...

The failure of Obamacare to attract a sufficient number of younger, healthier customers has resulted in a pool of less healthy enrollees who are more costly to insure....

Obamacare—with its soaring premiums, high out-of-pocket costs and dwindling networks and services—is serving as the model for employers across the country as they seek to shift more health care costs onto their workers.
Attacks on health care benefits have featured prominently in a series of recent contract disputes, including strikes by 4,800 nurses at Allina Health in Minnesota, a strike by 5,500 faculty and coaches at Pennsylvania’s 14 state-run universities, a strike at Harvard University by 700 dining service workers, and a walkout of Libbey Glass workers in Toledo, Ohio. In each case, employers have sought to drastically reduce health benefits and shift workers to inferior plans with burdensome out-of-pocket costs.
Obamacare is also the spearhead of a gathering attack on Medicare, the government health insurance program for 53 million American seniors and disabled people. Last year, President Obama signed into law a bipartisan bill revising the payment system for Medicare providers to reward doctors for cutting costs and penalize them if the volume and frequency of the health services they provide are deemed too high. Doctors will have a financial incentive to withhold more extensive tests and services from Medicare recipients....

He did not acknowledge that the ACA imposes no serious restraints on the insurance companies, pharmaceutical firms or hospital chains, and uses financial coercion to drive people to buy bare-bones plans with high out-of-pocket costs. Nor did he take note of the intensified assault on health benefits by employers, both private and public, across the US.
Obama boasted, “All told, about another 10 percent of the country now have coverage.” He was silent on the national scandal of 29 million Americans remaining uninsured...

Neither the Democrats nor the Republicans have any intention of challenging the for-profit health care industry. The deepening attack on health care, exemplified by the projected 25 percent hike in Obamacare premiums, serves as a warning of the austerity agenda of the next administration, whichever party occupies the White House in January.

13--Hillary's "pivot to Asia" in trouble

As secretary of state, Clinton was the chief architect of the “pivot” and the proponent of a more militarist strategy against China. Among her speeches to Wall Street released by WikiLeaks was one in 2013 in which she declared: “We’re going to ring China with missile defence. We’re going to put more of our fleet in the area.”

Trump’s policy towards Asia is far from clear, but his “Make America Great” sloganeering suggests an even more aggressive stance towards China. Moreover, it is one in which Washington would insist that allies such as Japan and South Korea bear a heavier burden.
The uncertainties generated by the US election along with heightened geo-political tensions and a worsening global economic outlook are encouraging the ruling classes of the Asia Pacific to hedge their bets. The two central pillars of the US “pivot”—Japan and Australia—are both pursuing policies that are at odds with the US.

14--It's Still The Media, Stupid!

The major media outlets are controlled by five corporate giants – Time Warner, Disney, Rupert Murdoch’s News Corp., Bertelsmann of Germany, and Viacom – the largest purveyors of crony capitalism and cultural Marxism the world has ever witnessed.  No dissent is allowed to be heard on these outlets nor is there any hope of career advancement for journalists or writers if the Leftist paradigm is not trumpeted.

15--3 million less people employed today than 2007

16--The deficit is too small not too big

17--Japan’s Exports Drop for 12th Month in Dismal Year for Trade

The yen has gained 16 percent since the start of the year, and soft global demand has made matters worse. This environment has made companies more reluctant to invest in domestic production, compounding the difficulty of creating economic growth.

18--Why Corporate America’s Debt Is a ‘Major Risk’

Asset valuations are extreme; returns are poor, the probability of losses is high and the ability to recover any losses quickly is low,” he writes.
In particular, the strategist sounded an alarm over the state of corporate America’s balance sheet. Company spending exceeds cash flow by a near-record amount—a fundamentally unsustainable situation—as net debt continues to increase at a rapid pace.

In many cases, companies have used debt to repurchase their own stock, flattering their bottom-line financial performance. While not all buybacks are financed by debt, Lapthorne did note a correlation between net repurchases and the change in corporate indebtedness.
­“U.S. corporate balance sheets are a major risk going forward,” he says. “U.S. corporates are massively overspending.”

For corporate credit, there’s very little concern about short-term coverage from the market,” write analysts at Bespoke Investment Group. “We note that maturities continue to creep up slowly; despite higher spread costs, corporates are generally borrowing further out the curve and ‘locking’ low rates.”
But over the long haul, the performance of stock markets will be primarily driven by earnings increases—and the level of corporate indebtedness implies that any latitude to boost earnings per share by shrinking the denominator is limited.
Corporate profits in the U.S., meanwhile, have declined for five consecutive quarters. As Bloomberg’s Matthew Boesler reminds us, the combination of near-record corporate debt-to-GDP, record low return on equity, ever-higher labor costs, and subdued pricing power doesn’t paint an inspiring picture for growth.

U.S. profitability is on a “cyclical downtrend,” Lapthorne concludes.

19--Obama beats Bush on deportations


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