Saturday, February 27, 2010

RealityZone; A New Era ?: U.S. Dollar Under Attack As Currency Reserve?

RealityZone; A New Era ?: U.S. Dollar Under Attack As Currency Reserve?

week ending Feb 27th

the review of the week ending Feb 27th has been completed & posted on the globalglassonion blog...it briefly summarizes and links to articles from MSM and the blogosphere, generally on the topics listed below and whatever else...
anyone who wants my weekly emailing of miscellaneous & selected links, mostly from these GGO posts, contact me....

Thursday, February 25, 2010

Can we handle the truth?

from interfluidity…by Steve Randy Waldman

Both globally and within most nations, the patterns of consumption required to sustain existing social arrangements are inconsistent with the distribution of the fruits of production. Social and economic stability, therefore, depend upon redistribution for which there is no overt legal framework or political consensus. To square this circle, the financial and government sectors have evolved means of hiding redistribution in complex, continually improvised arrangements. Unsurprisingly, massive wealth distributions arranged in this way leave much to be desired, in terms of straight corruption (the financial and government sectors redistribute a lot of wealth to themselves), justice (e.g. wealth is redistributed to those who happen to speculate early in bubbles), and sustainability (the illusion of value behind the claims of those from whom wealth is taken may prove fragile, but “loss realizations” are socially disruptive if they are not carefully paced and allocated).

Neither financial nor political reform can succeed unless we overcome the social and economic contradictions we have relied upon the financial sector to literally paper over. Off-balance-sheet liabilities that hide the impairment of savers’ claims, whether in subprime mortgage-backed securities or sovereign entitlement programs are not aberrations. They are essential tools in the arsenal of social stability, the economic equivalent of military “black-ops”, things that must be done but must always be denied in order to protect the American (and European, and Chinese) way of life. Unless we define overt arrangements that overcome the contradictions between the organization of production and socially desirable patterns of consumption, each scandal and reform will necessarily be followed by some new technique or trick that delivers, however unjustly or corruptly, the wealth transfers upon which our societies depend. Our choices are to overtly align the fruits of production with patterns of consumption, to continue to employ accounting fictions and magic to pretend away the contradictions, or to undergo some form of collapse.

Tuesday, February 23, 2010

and the Fed wants to tighten this??

yesterday the St. Louis Fed released its latest monthly look at commercial and industrial loans at major banks -- a measure that some would say represents the essence of the US banking system. this measure is still falling like a knife -- a bad sign for the ongoing health of the economy…

also not what we were promised when we bailed out the banks….

chart of the day, Commercial And Industrial Loans At All Commercial Banks

chart from the business insider

the following excerpt  is one of several articles from the past couple weeks describing planned Fed actions…

Fed to Outline Future Tightening Steps - WSJ - Federal Reserve Chairman Ben Bernanke will begin this week to lay out a blueprint for a credit tightening, to be followed once the Fed decides the economy has recovered sufficiently. The centerpiece will be a new tool Congress gave the central bank in October 2008: an interest rate the Fed pays banks on money they leave on reserve at the central bank. When the Fed is ready to tap the brakes, it plans to raise the rate paid on excess reserves. The higher rate would entice banks to tie up money they otherwise might lend to customers or other banks. The Fed expects such a maneuver to pull up other key short-term rates, including the federal-funds rate—long the main tool for steering the economy.

Sunday, February 21, 2010

Hold Onto Your Underwear

in light of the rekindling of media hysteria following the suicidal plane crash in Austin, it seems to be an appropriate time to put these periodic violent events into perspective…

This Is Not a National Emergency
By Tom Engelhardt

Let me put American life in the Age of Terror into some kind of context, and then tell me you’re not ready to get on the nearest plane heading anywhere, even toward Yemen.

In 2008, 14,180 Americans were murdered, according to the FBI.  In that year, there were 34,017 fatal vehicle crashes in the U.S. and, so the U.S. Fire Administration tells us, 3,320 deaths by fire.  More than 11,000 Americans died of the swine flu between April and mid-December 2009, according to the Centers for Disease Control and Prevention; on average, a staggering 443,600 Americans die yearly of illnesses related to tobacco use, reports the American Cancer Society; 5,000 Americans die annually from food-borne diseases; an estimated 1,760 children died from abuse or neglect in 2007; and the next year, 560 Americans died of weather-related conditions, according to the National Weather Service, including 126 from tornadoes, 67 from rip tides, 58 from flash floods, 27 from lightning, 27 from avalanches, and 1 from a dust devil.

As for airplane fatalities, no American died in a crash of a U.S. carrier in either 2007 or 2008, despite 1.5 billion passengers transported.  In 2009, planes certainly went down and people died.  In June, for instance, a French flight on its way from Rio de Janeiro to Paris disappeared in bad weather over the Atlantic, killing 226.  Continental Connection Flight 3407, a regional commuter flight, crashed into a house near Buffalo, New York, that February killing 50, the first fatal crash of a U.S. commercial flight since August 2006.  And in January 2009, US Airways Flight 1549, assaulted by a flock of birds, managed a brilliant landing in New York’s Hudson River when disaster might have ensued.  In none of these years did an airplane go down anywhere due to terrorism, though in 2007 two terrorists smashed a Jeep Cherokee loaded with propane tanks into the terminal of Glasgow International Airport.  (No one was killed.)   

The now-infamous Northwest Airlines Flight 253, carrying Umar Farouk Abdulmutallab and his bomb-laden underwear toward Detroit on Christmas Day 2009, had 290 passengers and crew, all of whom survived.  Had the inept Abdulmutallab actually succeeded, the death toll would not have equaled the 324 traffic fatalities in Nevada in 2008; while the destruction of four Flight 253s from terrorism would not have equaled New York State’s 2008 traffic death toll of 1,231, 341 of whom, or 51 more than those on Flight 253, were classified as “alcohol-impaired fatalities.”

Had the 23-year-old Nigerian set off his bomb, it would have been a nightmare for the people on board, and a tragedy for those who knew them.  It would certainly have represented a safety and security issue that needed to be dealt with.  But it would not have been a national emergency, nor a national-security crisis.  It would have been nothing more than a single plane knocked out of the sky, something that happens from time to time without the intervention of terrorists.

And yet here’s the strange thing: thanks to what didn’t happen on Flight 253, the media essentially went mad, 24/7.  Newspaper coverage of the failed plot and its ramifications actually grew for two full weeks after the incident until it had achieved something like full-spectrum dominance, according to the Pew Research Center’s Project for Excellence in Journalism.  In the days after Christmas, more than half the news links in blogs related to Flight 253.  At the same time, the Republican criticism machine (and the media universe that goes with it) ramped up on the subject of the Obama administration’s terror wimpiness; the global air transport system plunked down millions of dollars on new technology which will not find underwear bombs; the homeland security-industrial-complex had a field day; and fear, that adrenaline rush from hell, was further embedded in the American way of life.

Under the circumstances, you would never know that Americans living in the United States were in vanishingly little danger from terrorism, but in significant danger driving to the mall; or that alcohol, tobacco, E. coli bacteria, fire, domestic abuse, murder, and the weather present the sort of potentially fatal problems that might be worth worrying about, or even changing your behavior over, or perhaps investing some money in.  Terrorism, not so much.

read the rest at Tom Dispatch…

Saturday, February 20, 2010

week ending Feb 20th

the review of the week ending Feb 20th has been completed & posted on the globalglassonion blog...it briefly summarizes and links to articles from MSM and the blogosphere on the topics listed below and whatever else, including about 3 dozen on the US deficits and mounting debt, & about 4 dozen articles relating to the fallout from the continuing greek debt crisis in europe...

anyone who wants my weekly emailing of miscellaneous & selected links, most from these posts, contact me....

Friday, February 19, 2010

the dollar was a delusion we had in common

The U.S. economy ceased to function this week after unexpected existential remarks by Federal Reserve chairman Ben Bernanke shocked Americans into realizing that money is, in fact, just a meaningless and intangible social construct.

Enlarge Image Bernanke

Calling it "basically no more than five rectangular strips of paper," Fed chairman Ben Bernanke illustrates how much "$200" is actually worth.

What began as a routine report before the Senate Finance Committee Tuesday ended with Bernanke passionately disavowing the entire concept of currency, and negating in an instant the very foundation of the world's largest economy.

"Though raising interest rates is unlikely at the moment, the Fed will of course act appropriately if we…if we…" said Bernanke, who then paused for a moment, looked down at his prepared statement, and shook his head in utter disbelief. "You know what? It doesn't matter. None of this—this so-called 'money'—really matters at all."

"It's just an illusion," a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him. "Just look at it: Meaningless pieces of paper with numbers printed on them. Worthless."

According to witnesses, Finance Committee members sat in thunderstruck silence for several moments until Sen. Orrin Hatch (R-UT) finally shouted out, "Oh my God, he's right. It's all a mirage. All of it—the money, our whole economy—it's all a lie!"

Screams then filled the Senate Chamber as lawmakers and members of the press ran for the exits, leaving in their wake aisles littered with the remains of torn currency.

Enlarge Image EconomyU.S. markets closed as traders left their jobs and resolved for once to do or make something, anything of real value.

As news of the nation's collectively held delusion spread, the economy ground to a halt, with dumbfounded citizens everywhere walking out on their jobs as they contemplated the little green drawings of buildings and dead white men they once used to measure their adequacy and importance as human beings.

continue reading…

Thursday, February 18, 2010

who owns us – foreign version

click to enlarge….for table plus footnotes click the link.
Major Foreign Holders of U.S. Treasuries

it is thought by many that some of the UK holdings are proxies for the chinese

Monday, February 15, 2010

How the Volcker Rule Misses the Shadow Banking System

the timing of the announcement of the Volcker rule came suspiciously close after the Democratic loss of Kennedy’s seat, but linkage was denied, saying that the plan had been in the works for 6 months…to date, we havent seen much expansion of the detail, except for Volcker’s articles & interviews in several newspapers…besides, as yves smith saysdebating the merits of the Volcker Rule may be a tad academic, given the rousing opposition it is encountering from Congress (and you have to love the world of politics: the biggest obstacle is, basically, “We sorta have a deal, you can’t retrade it!” Funny how banks and AIG get to redo their deals on quick notice, but the poor chump public? Not a chance)”  nonetheless, she went on to post excerpts of a long article by Mike Konczal at New Deal 2.0 in her discussion of the rule…in turn, ive taken the end of Konczal’s article from his post at Rortybomb, below, if only because it graphically illustrates the problem…

Like the Glass-Steagall regulatory framework, the Volcker Rule focuses on the intersections between commercial banking, investment banking, and proprietary activities. Notably, each of those business models — in their “pure” forms — has a funding model that suits its asset risk profile. Commercial banks make relatively illiquid loans, but they have privileged access to relatively resilient core deposit funding. Investment banks hold inventories of relatively liquid securities, which enables them to use extremely efficient, short-term, low-cost funding (like the overnight “repo” markets).

Many of the credit bubbleʼs excesses can be traced to the “shadow banking” sector, which is essentially the intersection between commercial banking and investment banking business models: shadow banks take illiquid credit and interest rate risk (like commercial banks), but fund themselves principally through the wholesale markets (like investment banks). Because of long-recognized regulatory loopholes, shadow banks were also frequently able to operate with significantly lower capital requirements than commercial bank competitors. With both capital and funding advantages in hand, shadow banks grew to some 60% of the U.S. credit system.

To many investors and policy-makers during the bubble, shadow banking vehicles (like “SIVs”) appeared to perform precisely the same functions as commercial banks, but were more efficient. Unfortunately, shadow banks proved to be extraordinarily fragile; both the asset and liability components of their business models suffered as the credit cycle turned. Unwilling to risk a shutdown in the short-term funding markets, central banks and governments stepped in to prop up the shadow banking system.

And as such, the Volcker Rule is poorly targeted:

I rarely say this, but for anyone interested in financial markets this presentation is a must-read. The graphical approach works perfectly. Read it twice, then go back and read the interview I did with Perry Mehrling about shadow banks, or Ezra Klein’s write-ups (One and Two) of how a bank run in that overlapping space works, using that map as a guide.

Also, for fun, here’s why the financial system looked so efficient during the naughts, efficient in a way that made regulators want to sit back and let it work its wonders:

(click on images to expand to full window)

read Konczal’s post in it entirety

or see Yves’s take at naked capitalism

Saturday, February 13, 2010

week ending Feb 13th

the review of the week ending Feb 13th has been completed & posted on the globalglassonion blog...it briefly summarizes and links to articles from MSM and the blogosphere on the topics listed below and whatever else, including about four dozen articles about and analysis of the Euro crisis precipitated by Greece debts...
anyone who wants my weekly emailing of miscellaneous & selected links, most from the posts, contact me....

Sunday, February 7, 2010

lies, damn lies, & statistics

a lot of changes came down in last Fridays unemployment report, and for the most part, the media only reported the headline number, maybe breaking out part time/temporary or hours per week or similar stats, usually with an occasional anecdote or example, without digging below the surface of the government reported numbers…fortunately, a number of bloggers have each tackled the jobs the MSM journalists should have been doing, so ill try to gather the more salient points and present them here…

first, ill send you to CalculatedRisk, where he tackles the fact that the both the payroll jobs number and the unemployed rate declined, which even confused krugman…more details there, but the easy explanation is that this is because the data comes from two separate surveys; the establishment survey (employers) showed a loss of 20,000 payroll jobs in January, but the much smaller household sampling showed an increase in the employment level of 541,000.

next, ed harrison explains the effect of the seasonal adjustments: Unemployment number decline is all about seasonal adjustmentsA lot of people are questioning the unemployment rate of 9.7% in the face of a –20,000 non-farm payroll. How could we be losing jobs and have the unemployment rate drop? It would seem people are dropping out of the labor force.  However, I have now parsed the household survey data and most of the data seems reasonable. The labor force participation rate actually ticked up slightly (both seasonally adjusted and unadjusted) – as did the number of people not in the labor force who wanted a job (unadjusted only). This is what we would expect. What sticks out is the seasonal adjustment for the number of persons employed and unemployed. In December 2009, there were 15.267 million people unemployed on a seasonally-adjusted basis.  This ticked down to 14.837 in January 2010, a fairly large drop of 430,000. Meanwhile the unadjusted numbers go the other direction – massively.  In December 2009, the number of unemployed persons was 14.740 million. This rose 1.4 million in January to 16.147 million.     … the above link has detailed tables…and brad delong charts & then points out that this “is the fifth year in a row in which the year start has been accompanied by a drop in seasonally-adjusted UI claims that is then immediately reversed--suggesting that there might perhaps be a small bug in the seasonal adjustment process.”

then, kid dynamite and others have explained that the annual Unemployment: Birth/Death Adjustments Overstated Jobs by 902,000 - Leading up to the release of today's BLS Employment report, there was a lot of talk about the birth/death adjustment.  The b/d model can be a bit tricky to explain - I think Barry Ritholtz's old piece here does a good job of summarizing what happens.  Basically, the BLS estimates job creation or destruction based on the filings of new company incorporations - because companies which are too new or too small don't get counted in the CES (current employment statistics) survey.  …so obviously, comparison from december to january arent even on the same playing field, let alone a level one…Bloomberg also has some interactive charts to show how this adjustment works in an article titled Birth Death Model Insights….

Jesse @ Le Cafe Americain explains what this means:  Non Farm Payrolls Benchmark Revision and the Unemployment Rate as Cruel Farce - As you may have heard, the Bureau of Labor Statistics did a benchmark revision. This is Washington speak for 'revised the numbers as far back as anyone might care to remember to give ourselves more wiggle room.'  The benchmark is a product of the Bernays Factor, that measure of public gullibility which permits obviously contrived government statistics to be taken seriously. Did you react to the positive jobs trend initially announced in September - October 2009? Oops, it was really a greater loss than expected, and not a gain at all. One can only suspect that in a few years this whole recovery could be revised away without so much as a bureaucratic blush. Here is a picture comparing the old and new headline numbers.. The change is pervasive. One item of note is the taking of more job losses in the earlier years, setting up a stable base for potential job gains in the present, without embarrassing oneself by getting out of synchronization with the actual growth of the civilian population. There will be more 'truing up' of the numbers in the future.

there are other unemployment reports which may be more reliable…

TrimTabs: Here's Why The Real Jobs Loss Number Was 5x Worse Than What The BLS Reported - TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 104,000 jobs in January.  Meanwhile, the Bureau of Labor Statistics (BLS) reported the U.S. economy lost 20,000 jobs.  We believe the BLS has underestimated January’s results due to problems inherent in their survey techniques. In addition to their regular report, the BLS published benchmark revisions to their employment estimates derived from an actual payroll count for March 2009.  As a result, job losses from April 2008 through March 2009 were revised up a whopping 930,000, or 23% from their earlier revisions.  In addition, the BLS revised their job loss estimates for 2009 up 617,000, or 14.8%. While the BLS originally reported job losses of 4.2 million in 2009, TrimTabs reported 5.3 million, a difference of more than a million lost jobs.  We consistently reported that based on real-time tax data, job losses were much higher than the BLS was reporting.  This past January, the BLS revised their job loss estimate to 4.8 million, an increase of almost 600,000 lost jobs.  The new total brought the BLS’ revised estimates much closer to TrimTabs’ original estimate based on real-time tax data.

and there’s also john williams at shadow stats, who produces an alternate unemployment report (with chart), which shows U-6 still above 20%…

in addition, something noone mentioned, but im sure is a factor in what will be a temporary bump in the employment numbers, is the 1.2 million or more census workers now being hired…

i have previously posted an unemployment chart comparing job losses in this recession to others: here’s a link to a chart  showing the employment-population ratio; this is the ratio of employed Americans to the adult population….
and just so i havent left any thing out, here’s a FRED chart illustrating the real problem: how long people have been out of work, compared to other periods in our post-war history…

Saturday, February 6, 2010

week ending Feb 6th

the review of the week ending Feb 6th has been completed & posted on the globalglassonion blog...it briefly summarizes and links to articles from MSM and the blogosphere on the topics listed below and whatever else...

Friday, February 5, 2010

Blair: US Govt Can Kill Citizens Overseas as Part of ‘Defined Policy’

Director of National Intelligence Tells Congress Americans Can Be Killed Overseas

by Jason Ditz, February 03, 2010

In testimony before the House Intelligence Committee today, National Intelligence Director Dennis Blair told representatives that American citizens can be assassinated by the US government when they are oveseas.

Blair said the comments were intended to “reassure” Americans that there was a “set of defined policy and legal procedures” in place and that such assassinations are always carried out by the book.

Rep. Pete Hoekstra (R – MI) inquired about the procedures involved, asking what the legal framework was under which Americans could be killed by the intelligence community.

Continue reading.....

Related Washington Post article

Wednesday, February 3, 2010

Murray Hill Incorporated is Running for Congress

Murray Hill Incorporated, a PR firm, recently announced that it planned to run in the Republican primary in Maryland’s 8th Congressional District.

Here is the company’s first “campaign” ad:



see campaign website....

Monday, February 1, 2010

So, How Do You Think This Movie Will End?

See Also: We Are So Screwed

These two charts tell you pretty much all you need to know about the state of the US economy.  They also, unfortunately, provide some clues as to how this movie will end.

First, from John Mauldin, the state of the U.S. government's finances.  The red line is spending.  The blue line is tax revenue.

US Government Spending Versus Revenue

Can you imagine if that was your household?

Second, from Ned Davis, the state of our country's debts, as measured by debt as a percentage of GDP.  The little peak to the left was the debt mountain we accumulated during the Great Depression, which took a decade to work off.  The, um, bigger peak to the right, is the one we've accumulated now.

debttogdp3.png

So how will this movie end?

continue reading…