Thursday, November 16, 2017

Today's links

1---The Nation nails it

...Isn’t there implicit contempt for American voters implied in the charge that RT transformed decisive segments of the electorate into zombie-like pro-Trump voters through a relatively negligible stream of “foreign” news reports, commentaries and ads? Are we supposed to believe the US media environment is so fragile and vulnerable that it can be poisoned by a relatively tiny amount of Russian messaging?

2-- Wage Stagnation in Nine Charts  EPI

Wage stagnation for the vast majority was not created by abstract economic trends. Rather, wages were suppressed by policy choices made on behalf of those with the most income, wealth, and power

3--Clown Prince continues purge

After the mass arrests in Saudi Arabia Trump tweeted: "I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing. Some of those they are harshly treating have been 'milking' their country for years."..

Saudi Arabia has accused Iran of "direct military aggression" through the Houthi rebels in Yemen.
The crown prince has pledged to overhaul the economy of Saudi Arabia by weaning it off its heavy reliance on oil, rid the kingdom of systemic corruption, and "moderate" a society that has long been influenced by religious hardliners.

4--The worthless financial system

In her OpEd, Foroohar explains how the big banks have become unmoored from their core purpose. She writes:

“In the 1970s, most of their financial flows, which of course come directly from our savings, would have been funneled into new business investment. Today, only about 15 percent of the money coming out of the largest financial institutions goes to that purpose. The rest exists in a closed loop of trading; institutions facilitate and engage in the buying and selling of stocks, bonds, real estate and other assets that mainly enriches the 20 percent of the population that owns 80 percent of that asset base. This doesn’t help growth, but it does fuel the wealth gap.”

Foroohar makes these other astute observations as well:
“The financial industry, dominated by the biggest banks, provides only 4 percent of all jobs in the country, yet takes about a quarter of the corporate profit pie…
“Finance has become the tail that wags the dog. Until we start talking about how to create a financial system that really serves society, rather than just trying to stay ahead of the misdeeds of one that doesn’t, we’ll struggle in vain to bridge the gap between Wall Street and Main Street.”

5--$24 trillion?? Whither the Fed’s “full employment, price stability” mandate?

It tells us its baloney. It tells us its public relations-hype designed to bamboozle the sheeple who can’t see what’s going on right beneath their noses.. It tells us the Fed has a secret mandate to assist the profit-accumulation process for the Kleptocrat class of ivy league moochers. (Wall Street) It tells us that the Fed’s real job is implement the policies that best facilitate the upward distribution of wealth. It tells us that the Fed’s so called “independence” is a complete and utter fraud and that if Janet Yellen or any of her meat-puppet-colleagues on the FOMC ever veered as much as a centimeter to the left of her corporate marching orders– they’d find themselves wrapped in plastic-sheeting and gasping for air at the bottom of the East River in a pair of cement booties...

Here’s a little background from an article at the WSWS:
“A new report issued by the Swiss bank Credit Suisse finds that global wealth inequality continues to worsen and has reached a new milestone, with the top 1 percent owning more of the world’s assets than the bottom 99 percent combined.

Of the estimated $250 trillion in global assets, the top 1 percent owned almost exactly 50 percent, while the bottom 50 percent of humanity owned collectively less than 1 percent. The richest 10 percent owned 87.7 percent of the world’s wealth, leaving 12.3 percent for the bottom 90 percent of the population.” (“Top 1 percent own more than half of world’s wealth“, World Socialist Web Site)
But it’s not just the fact that half of everything is owned by a handful of obscenely-wealthy, money-grubbing loafers. This same voracious crew of miscreants is pulling down the lions-share of the yearly income too. Check it out:

“The census data also reveals that income inequality in America remained virtually unchanged from 2014, with the wealthy in the top fifth of the population taking in about half of all household income, while the bottom fifth earned only 3.4 percent.” (“Despite increase in 2015, US household income still lags behind pre-recession levels“, Kate Randall, World Socialist web Site)
So –not only do the plutocrats own half of everything on planet earth– their share of the booty is actually increasing every year. Nice, eh?

The point is, none of this is accidental. These outcomes are the direct result of policy, the Fed’s policies. And the Fed is not alone either. This greatly-accelerated class war is a now global phenom. Just look at this tidbit I picked up from an article at CNBC:
“Data from JPMorgan shows that the top 50 central banks around the world have cut rates 672 times since the collapse of Lehman Brothers, a figure that translates to an average of one interest rate cut every three trading days. This has also been combined with $24 trillion worth of asset purchases.” (“QE Infinity: Are we heading into the unknown?“, CNBC)
$24 trillion!

6--US Congressional hearing:--Former FBI agent says tech companies must “silence” sources of “rebellion”

The Democrats focused their remarks on demands that the Internet companies take even more aggressive steps to censor content. In one particularly noxious exchange, Feinstein pressed Google’s legal counsel on why it took so long for YouTube (which is owned by Google) to revoke the status of Russia Today as a “preferred” broadcaster. She demanded, “Why did Google give preferred status to Russia Today, a Russian propaganda arm, on YouTube? ... It took you until September of 2017 to do it...

Salgado’s apparently false statement is of a piece with Google’s other actions to censor the Internet. These include changes to its search algorithm, which, behind the backs of the public, have slashed search traffic to left-wing websites by some 55 percent, with the World Socialist Web Site losing some 74 percent of its search traffic.
Stressing the transformation of the major US technology companies into massive censorship operations, Democratic Senator Sheldon Whitehouse of Rhode Island asked the representatives of the firms, “I gather that all of your companies have moved beyond any notion that your job is only to provide a platform, and whatever goes across it is not your affair,” to which all answered in the affirmative.

While the senators and technology companies largely presented a show of unity, just how far the companies were willing to go in censoring users’ content and helping the government create blacklists of dissidents was no doubt a subject of contentious debate in the background.

On Friday, Feinstein sent a letter to Twitter’s CEO demanding that the company hand over profile information—possibly including full names, email addresses, and phone numbers—related to “divisive” “organic content” promoted by “Russia-linked” accounts.

7--Jack Rasmus 

Signs are beginning to multiply that financial markets are beginning to peak, both in the US and worldwide, many having reached bubble proportions..

Fiscal policy is generally ruled out because of fear of deficits. The policy instrument that remains is monetary—low interest rates and quantitative easing (QE), implemented in the United States, United Kingdom (UK), (EU), and Japan. Other standard policies are, in the EU, austerity—which may cut deficits but obviously does not generate growth (and, by depressing tax revenues over time, worsens deficits)—and structural reform. Besides privatization, the main component of reform is labor market flexibilization, in other words depressing wages and incomes. This has been implemented in the United States since the 1970s and 1980s, in the UK in the 1990s, in Germany and South Korea in the 2000s, and is now on the scaffolds in Japan, France, and Spain (and possibly Italy). The objective is to boost international competitiveness by depressing wages and benefits, which (a) ceases to have an effect when every country is doing the same, (b) assumes the key problem is cheap supply, whereas supply is actually abundant and what is lacking is demand, and (c) by depressing wage incomes, it further reduces domestic demand. No wonder these policies make matters worse. Thus, explanations of slow growth fall short and policies have been counterproductive. This is where Jack Rasmus’s book comes in. It offers the most pertinent analysis of the stagnation trap I have seen.

The world has turned into Japan,” according to the head of a Hong Kong-based hedge fund.“When rates are this low, returns are low. There is too much money and too few opportunities” (Sender, 2016). However, by providing an organized and systemic focus on finance and liquidity, Rasmus makes clear that the policies that aim to remedy stagnation (low interest rates, QE, competitive devaluation, and bank bailouts) and provide stability are destabilizing, act as a break on growth, and worsen the problem. According to Karl Kraus, psychoanalysis is a symptom of the diseasethat it claims to be the remedy for, and the same holds for the central bank policies of crisis management.

8--Defending RT

RT is the focus of attack precisely because it provides a means of information gathering outside the bounds of corporate media. RT viewers can access a wide variety of viewpoints, including those in opposition to United States and NATO foreign policy. Russian had already been branded as evil, but the claims of interference in the 2016 election and connections to Donald Trump have been effective and provided the perfect cover for promoting United States foreign policy and covering up the Democratic Party corruption and ineptitude which led to Donald Trump’s victory.

9--Russia-gate, BAR

The CIA, in particular, made Trump their National Security Enemy #1. They are the main architects of Russiagate -- a “conspiracy” in which the predicate Kremlin “crime” of DNC document-stealing remains unproven, and which pales into almost laughable insignificance when compared to decades of U.S. wars of regime change, economic strangulation, assassinations, and outright genocide around the world. Syria and Congo (6 million-plus dead) are crimes of the worst order known to humankind. Russiagate is a lie that would be no more than a Russian diplomatic blunder, even if true.

The corporate media are the public agents of the mass psychological operation. With media consolidation at such an advanced state, it turns out to be not all that difficult for a handful of media conglomerates, each tied inextricably to finance capital and in close collaboration with one of the corporate parties and all of the intelligence outfits, to create and sustain a “state of emergency” for a long period of time -- more than year, so far. This induced “state of emergency” is designed to prepare the American public, politically and psychologically, to maintain the momentum of the U.S. imperial offensive in the world, by demonizing Russia as an internal, as well as external, threat to the United States. In other words, Russiagate is an artificial crisis that was made necessary by the actual crisis of U.S. imperialism -- its economic decline and military dependence on jihadist foot soldiers, and just as importantly, the utter collapse of U.S. moral authority in the world.
The U.S. imperial orbit is shrinking, dramatically. Russiagate is the domestic response to this geopolitical reality.

10--Loan origination at 3 year low

Loan origination volume hit a three year low this year.  What?  How is that possible when all the cheerleaders are out in the streets preaching the good gospel of buying real estate?  Well the reality is that a good portion of the market is still driven by investors...

Isn’t the market blistering hot?  On the price side, yes.  You have people fighting over scraps.  And you should keep in mind that the economy has been on a massive bull run since March of 2009 (over 8 years now).  Some people have forgotten what it is to live in a correction.

11--Seriously underwater property owners

The housing market has recovered nearly in tandem with the stock market.  The stock market has been on a virtual nonstop bull run since early 2009.  So people have forgotten about our recent financial history.

...Back in 2012 you had 12.5 million underwater properties.  That number has fallen to 5.49 million today.  But that is the thing, you still have a large number of people that overpaid and yet somehow, Kool-Aid drinkers are trying to convince people to buy at the peak when there is clear evidence of those that over paid still out there today!...

This is really interesting.  While the number of underwater homes has decreased dramatically as property values have increased, you wouldn’t know that we still have 5.49 million underwater homeowners today based on the rhetoric we are now seeing.

12--nearly 40 percent of young Californians living at home versus 34 percent nationwide.  Make no mistake though, this is a national trend.

The numbers are startling because when we brought attention to the issue a few years ago the number was at 2.3 million young adults living at home.  Today it is now up to 3.6 million – if we combined these people it would be the third largest city in the U.S.

Young and living at home
There was this “fake news” narrative that many young Americans would be the second wind that would keep the housing market going strong.  That never materialized.  What did happen is that you had investors, foreign money, and wealthier older households buying the slim inventory available in the market.

13-- The housing ATM is now back in working order.  Hallelujah!

The housing ATM is now back in working order.  Hallelujah!  Black Knight Financial Services reported that in Q4 of 2016 44 percent of refinances were cash-outs.  Meaning, people are now using their homes like ATMs which flies in the face of all the house humpers who continually act as if people are acting prudent in buying crap shacks.  No, people are sucking on the teat of housing mania and now they are drinking from the nectar that is being produced.  This percentage was the highest level of cash-outs in the last eight years.  What was happening eight years ago?  The housing market was imploding in epic fashion and nearly 8 million people lost their homes to foreclosure.  Many lost their homes because they took out HELOCs and Home Equity loans to live beyond their means.  I have to make this point since people always forget – the vast number of foreclosures happened on traditional vanilla 30-year fixed rate mortgages....

This is a troubling indicator of mass euphoria which happens in bubbles.  In many cases, these larger economic contractions happen because of solvency issues when it comes to paying debt.  People are locking in future income to current purchases be it with houses, autos, or even going to college.  That debt still needs to get repaid.
The entire model right now is built on permanent real estate appreciation.  Even a slight decline is enough to burst this train.  But right now, you have an entire menu of new excuses that replace the excuses made back in 2007 and 2008

14-- The fact that 37% of properties sold in 2016 came from small investors is stunning

The bread and butter of any healthy housing market is having a good amount of first time home buyers.  That is what drives new home building and also allows for the homeownership rate to go up.  Most of the new household formation since the bubble burst was largely done through new rental households.  Institutional investors pulled back from the market starting in 2014.  Yet the homeownership rate continued to decline.  So who stepped in to fill in this gap?  Some of it was filled by first time buyers going in with low down payments thanks to FHA insured loans.  But a large percentage was made up by mom and pop investors with a lust for HGTV and their dreams of becoming flippers or landlords.  In most manias, once mom and pop are diving in with gusto you really need to think about what is going on.  I know Taco Tuesday baby boomers are looking for a little “excitement” in their lives and putting habanero salsa on your Chipotle burrito isn’t going to cut it.  So why not take the biggest risk by buying real estate when prices are near a new high?

37% of all properties bought in 2016 came from mom and pop investors.  That is a large number.  And this is happening in expensive areas as well.  Last year for example, there were many cases that I saw of a house being sold and then suddenly being put on the market for rent.  In one case, the property sold for $800,000 and was then rented out for $2,800.  This is an incredibly poor investment and that is why institutional investors are out but mom and pop are in it to “win it” because #YoLo housing.
This information is also is useful because it puts the brakes on the house humping cheerleaders thinking that everyone now has deep pockets and are out buying in mass.  No, you simply have fewer people able to purchase more properties and inventory is still low.  This is very telling regarding our nation where the top is getting very wealthy while the middle class is largely being pushed out

15--Credit check

Bank credit growth continues to decelerate, to where historically, after revisions, the economy would already be in recession. Housing and vehicles look like they are already reporting negative growth, and personal income growth has decelerated to about 0% growth, with personal spending holding positive only because people are dipping into savings, which historically has always been followed by a reduction in spending:

16--Personal income and spending, GDP, Trump meeting

Personal income growth continues to be depressed, which tends to keep spending down as well over time, though this month it had a nice one time increase due to the hurricanes, and the drop in the personal savings rate tells me it’s entirely unsustainable. Also the low inflation readings also support the notion of a general lack of aggregate demand

As mentioned above, real per-capita annual disposable income reportedly dropped -$19 per annum. At the same time the household savings rate was reported to have dropped to 3.4% (down -0.4% from the prior quarter). It is important to keep this line item in perspective: real per-capita annual disposable income is up only +7.10% in aggregate since the second quarter of 2008 — a meager annualized +0.74% growth rate over the past 37 quarters.
  • Household disposable income took another hit. Less money was available, and less money was saved — so that a significant portion of the already softening consumer spending came from savings, not pay checks.
  • 17--Existing home sales

    All regions are either slightly lower to flat year-on-year.
    And overall sales are flat, down 1.5 percent compared to September last year. Yet this report is positive for what is a lukewarm housing sector.

    18--Total Household Debt Increases, Delinquency Rates of Several Debt Types Continue Rising

    19--Is the stock market a bubble?

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