A couple of blog posts--today in Zero Hedge and Saturday's Automatic Earth--help to confirm some truths that otherwise might be called "conspiracy theories" or "doom-and-gloom" thought.
In Zero Hedge, Cazenove Strategist Discusses PPT And POMO Interventions To Keep Markets Ramping Higher, the credible technical strategist Robin Griffiths from the credible firm, Cazenove Capital Management in the United Kingdom, on credible CNBC, European edition, explains Permanent Open Market Operations and the Plunge Protection Team, both entities that provide money to banks to pump up the stock market via the Fed.
Fact is, the market is heading to a ridiculous and artificial 11,000 number, which it cannot sustain. Griffiths believes it will not get up to its April high, but it is sure to come down.
Automatic Earth furthers the charade when it considers company profits jacked up by "fuzzy accounting" practices in What You Know for Sure That Just Ain't So. The blog post delves into housing and unemployment and how statisical methodologies cover the numbers for politicians seeking reelection.
Understandably, every office wants statistics to look good for them, so the system never changes. Interestingly enough, voters don't want to hear the bad news either, according to the post. It's excellent reading, which supports the previous FIN TRUTH post that refers to a Stock Market Scam and a country that still suffers from a recession despite NBER's proclamation that it ended June 2009. If that's the case, get ready for the double dip.
Just remember how the U.S. government "fixed" our problems in October 1998. As the stock market continued falling, they announced the Troubled Asset Relief Program, TARP, to provide $800 billion to banks. After Congress voted against it, the market tanked. Enough special interests convinced a few extra members of Congress to vote for it.
The market held steady after falling about 7,000 or more points from its peak. Then, instead of falling off a cliff, the country slid off one with millions of lost jobs. Companies reorganized their balance sheets, keeping productivity high with fewer people.
Also, when it appeared banks were on the verge of collapse in the Spring of 2009, after the stock market hit a new low in March, banks did not have to count 100 percent of their loans as losses...even though residential and commercial real estate loans were all underwater. That would have caused the stock market to fall again, but the Federal Government manipulated the rules by pressuring the Financial Accounting Standards Board to change the accounting rules when it came to mark-to-market accounting.
It became mark-to-model accounting and then all bets were off. The market came back, investments improved and, therefore, balance sheets for many companies that invest improved as well.
Also, 401K plans improved for people holding stocks and bonds. The bond market yields have dropped to ridiculously low levels. More important for politicians, the people holding retirement funds based on the stock market are happy--for now.
But banks still cannot lend. They are holding undervalued real estate loans on their books because they are "extending" them for the borrowers and "pretending" the value will return on those residential and commercial properties. Based on today's values, these banks are insolvent.
Because of these undervalued loans, banks are holding more money in capital reserves. They are not lending it out. The companies who need the money cannot get it and the ones who don't need and can get money don't want it. See Community Banker Chimes In Regarding Small Business Lending from Mish's Global Trends Analysis for more about that.
So, we remain a stagnant economy with high unemployment--16.7 percent based on total unemployed--plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force. The number announced is 9.6 percent. Also, don't forget that many people have left the labor force, meaning that number gets higher when they return. During the Great Depression, unemployment was 25 percent of the American public and the stock market did improve based on optimism.
Now, we have false optimism because trillions of dollars mask insolvent banks, corporations that can only make a profit with skeleton crews, consumer spending declines and a society turning into the haves who can manipulate the system to work less, the haves who work more and the have-nots without jobs and few if any prospects. It is a bifurcated society that widens each day.
And, don't forget that since unemployment soared in 2008-2009, we have had two years of high school and college graduates that came out into the "real world"--many with debt from student loans--to a country in recession with few companies willing to hire inexperienced workers.
With unemployment likely to remain high for several years, and people with jobs likely to save money as they watch "extend and pretend" push economic uncertainty further into the decade (think Japan's lost decade), consumer spending will likely not account for 70 percent of gross domestic product. That means more product, less manufacturing and all those numbers that technically determine a recession, will determine it once again.
The question, again, is how long the inevitable truth takes to reveal itself--one year, five years, ten years or longer? It will depend on how long European countries can pretend that they have money without falling more in debt; it will depend on how long the U.S. can pretend residential and commercial real estate values will return to levels once held from 2005 to 2007--30 percent to 40 percent higher than current values--without falling any more in value; and it will depend on how long the U.S. can pretend that unemployment levels will lower to anywhere near record levels of 4.8 percent back in February 2008 without unemployment, in fact, rising anymore.
And, when we cannot pretend any longer, then the truth will rear its ugly head and we confront unemployment and the economy in a realistic manner.
Robert Michaels
Monday, September 27, 2010
Friday, September 24, 2010
Summers' Last Hurrah Before the Fall
"You know Harvard makes mistakes, too. Kissinger taught there."
--Woody Allen as Alvy Singer in Annie Hall.
Larry Summers is gone--back to Harvard University and/or Wall Street where he belongs. Good riddance. One more to go, but Treasury Secretary Timothy Geithner won't be gone until the whole thing has just about collapsed. Then we get rid of the Wall Street goons in favor of Elizabeth Warren, Paul Volcker and all the other economic politicos who favor middle-class America--if it survives.
However, it all may too little too late for a stock market that is just itching to crash.
Kenneth Denninger from The Market Ticker sums it up best in Anatomy of a Fed-Induced Bubble (Micro/Macro Level, NFLX).
As I write this entry, the Dow Jones is at a whopping 10,843 at 2:20 p.m. I'm not a stockbroker, or even close. I do know that housing market activity looks like a snail in reverse as people wait for an inevitable decline in home prices in most United States markets. Even though interest rates are at their lowest EVER, home sales declined during the summers, purchase applications recently fell and now we enter the slow time in the market.
Meanwhile, foreclosures will start to increase (after Ally Bank/GMAC--and others--rid themselves of illicit affidavits to foreclose on properties). Banks will eventually need to foreclose on squatters (people living in their homes without making a payment) and try to help those unemployed millions keep their homes as well, which they never will if the banks want their mortgages paid.
If the mortgages are not paid, then banks holding them in portfolio lose that money. If the loans are securitized, then bondholders lose their money. Either way, if there is no "extend and pretend" on these loans, somebody loses money.
Then, there's consumer spending. Here's another post from Denninger, Even A Blind Squirrel Finds A Nut (Reich), from The Market Ticker on consumer spending--or the unlikelihood it's going to get anywhere near 70 percent of Gross Domestic Product.
Now, this is all under the assumption that a European contagion doesn't take place and interest rates don't rise and a bond bubble doesn't pop in the process.
So, enjoy the market as we shoot for 11,000--just like the halcyon days of the Internet bubble. Maybe we'll get to 14,000 like the euphoric days of the housing bubble when everyone was "wealthy." Wouldn't that be great??
Yes, this is the last hurrah. As Lou Mannheim, Hal Holbrook's character in the 1987 film Wall Street said, "Enjoy it while it lasts, because it never does."
--Woody Allen as Alvy Singer in Annie Hall.
Larry Summers is gone--back to Harvard University and/or Wall Street where he belongs. Good riddance. One more to go, but Treasury Secretary Timothy Geithner won't be gone until the whole thing has just about collapsed. Then we get rid of the Wall Street goons in favor of Elizabeth Warren, Paul Volcker and all the other economic politicos who favor middle-class America--if it survives.
However, it all may too little too late for a stock market that is just itching to crash.
Kenneth Denninger from The Market Ticker sums it up best in Anatomy of a Fed-Induced Bubble (Micro/Macro Level, NFLX).
As I write this entry, the Dow Jones is at a whopping 10,843 at 2:20 p.m. I'm not a stockbroker, or even close. I do know that housing market activity looks like a snail in reverse as people wait for an inevitable decline in home prices in most United States markets. Even though interest rates are at their lowest EVER, home sales declined during the summers, purchase applications recently fell and now we enter the slow time in the market.
Meanwhile, foreclosures will start to increase (after Ally Bank/GMAC--and others--rid themselves of illicit affidavits to foreclose on properties). Banks will eventually need to foreclose on squatters (people living in their homes without making a payment) and try to help those unemployed millions keep their homes as well, which they never will if the banks want their mortgages paid.
If the mortgages are not paid, then banks holding them in portfolio lose that money. If the loans are securitized, then bondholders lose their money. Either way, if there is no "extend and pretend" on these loans, somebody loses money.
Then, there's consumer spending. Here's another post from Denninger, Even A Blind Squirrel Finds A Nut (Reich), from The Market Ticker on consumer spending--or the unlikelihood it's going to get anywhere near 70 percent of Gross Domestic Product.
Now, this is all under the assumption that a European contagion doesn't take place and interest rates don't rise and a bond bubble doesn't pop in the process.
So, enjoy the market as we shoot for 11,000--just like the halcyon days of the Internet bubble. Maybe we'll get to 14,000 like the euphoric days of the housing bubble when everyone was "wealthy." Wouldn't that be great??
Yes, this is the last hurrah. As Lou Mannheim, Hal Holbrook's character in the 1987 film Wall Street said, "Enjoy it while it lasts, because it never does."
Monday, September 20, 2010
European Contagion, Consumer Spending and the Stock Market Scam
What lies behind our columned monuments?
Look at The Parthenon in Athens, Greece.
Behind that ancient Greek building lies a bankrupt country.
The threat of European debt default is one major factor that will lead to a major stock market crash in the United States. Stocks started to plummet this summer around fears of European contagion from default of Greek debt.
When asked if Greece is insolvent, as Nouriel Roubini claims, Greek Prime Minister George Papandreou told Bloomberg News that Greece is not going to default.
“We know where we were, we know where we are, and we know what we are going to do—and we are doing it,” Papandreou said.
When pressed with the question of Greece being insolvent, he added, “We are not going to default, and we have done everything we have done—not only us, not only Greece, but the European Union itself and the IMF [International Monetary Fund], of course, have basically given us a vote of confidence and we, ourselves, are following the targets. We are doing it, in fact, not to default. If we were going to default it would have happened, we would have decided that many months ago. We decided not to do that for a number of reasons. We think it would be wrong for the Greek economy, it would be wrong for the European economy, it would make things worse in the end. That is why we are taking the pain to make these structural reforms and we are on target.”
So, that means Greece is insolvent since he never said it wasn't. Here's more from ZeroHedge.com on Papandreou's comments that Greece is undervalued and their bonds will not currently be coming to market.
But, the European situation further weakens as layoffs continue.
BBC reported that defense company BAE Systems revealed plans to cut nearly 1,000 jobs at sites across the United Kingdom. Also this month, the Wall Street Journal reported Royal Bank of Scotland Group PLC will cut 3,500 positions in its back-office operations across the U.K., as it continues to shrink its businesses.
CNBC reported today that the UK's tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, and the government would “deduct what it deems as the appropriate tax and pay the employees by bank transfer.”
So, I guess for consumers in the U.K., they won't be spending much money either.
Just for an added dimension, in Amsterdam, Dutch express and postal company TNT NV said it expects up to 4,500 “forced redundancies” at its troubled mail unit, meaning 4,500 layoffs.
Look at monuments in the nation's capital that resemble Greek architecture. They hide another bankrupt country behind banks holding undervalued assets. The U.S. has more debt than Greece, but more stature as well.
With 125 bank failures this year, there are still nearly 770 problem banks on the FDIC watchlist—holding residential and commercial mortgages and construction and land loans that may never be paid. The FDIC is basically insolvent and/or bankrupt.
With billions to trillions in undervalued assets, not to mention unpaid derivatives, major U.S. banks hold capital reserves without the ability to lend—meaning no credit for businesses that need it.
The second phase of the stock market crash involves a paradigm shift in consumer spending.
Since consumer spending reflects 70 percent of gross domestic product, less consumer spending means lower levels in GDP and, likely, a double-dip recession. Roubini gives it a 40 percent chance. One economist in a high government position said it was a 25 percent chance. A double-dip recession, basically, goes down in history as Great Depression II.
Overleveraged consumers, people with too much debt, reflect one reason why consumers will not be spending money anytime soon. Unemployment, at U-3 9.6 percent/16.7 percent under U-6, is another reason.
A Wall Street Journal analysis of data from the Fed and the Federal Deposit Insurance Corp. suggests that “over the two years ending June 2010, banks and other lenders charged off a total of about $588 billion in mortgage and consumer loans. That means consumers managed to shave off only $22 billion in debt through...belt-tightening.”
Meanwhile, overleveraged states try to balance their budgets. As a result, more state and local government employees face potential layoffs. In Austin, Texas, for example, an American-Statesman analysis of agency budget requests showed $21 billion in red ink, and 9,800 jobs that state agencies offered up for elimination as legislators prepare to trim that money from the 2012-13 state budget.
Still, despite these facts, the stock market increases.
Looked at the columned buildings on Wall Street. The Dow Jones Industrial Average rose 145 points to 10,753 today while the 10-year bond yield declines and oil and gold increase. It looks like money is going everywhere—into equities and conservative investments—but trading remains “light.”
Perhaps the fact that the National Bureau of Economic Research reported today that the recession officially ended in June 2009 influenced investors. NBER also said economic conditions are not favorable. Some analysts believe we are not only in a depression but never left the recession.
As Harry Truman once said, “It's a recession when your neighbor loses his job; it's a depression when you lose your own.”
Still, the stock market keeps moving up.
There is a reason, albeit conspiratorial, as to why the stock market is able to show such productive gains among such moderate growth at best.
In an August 2009 article, the writer, Chris Martenson, presents an investigative report, The Fed Buys Last Week's Treasury Notes, as to why the market remains up.
“In concert with the claims I made in the prior Martenson Insider post, The Fed bought $7 billion in Treasuries today and even more yesterday. This is at the upper end of their recent range of already exceptional purchasing activity...If things are so rosy that every single dip is being bought in the stock market with a vengeance, I wonder why these printing operations are really necessary?
"This $14 billion plus buying activity by the Fed represents fresh money created out of this air that was exchanged for the sovereign debt of the US. However, since the Fed has, for all practical purposes, never undone its permanent operations (hey, that's why they are called "POMOs") we can consider these additions of money as good as permanent themselves.”
Martenson calls the following Permanent OMOs: “The purchase or sale of Treasury securities on an outright basis adds or drains reserves available in the banking system. Such transactions are arranged on a routine basis to offset other changes in the Federal Reserve’s balance sheet in conjunction with efforts to maintain conditions in the market for reserves consistent with the federal funds target rate set by the Federal Open Market Committee.”
According to today's ZeroHedge.com, Fed Injects Record $5 Billion Into Stock Market With Today's POMO, Tyler Durden said “Today's POMO is over, and the result is a whopper: Brian Sack has just injected a record for QE Lite $5.2 billion in stock, in order to complete all the elements of today's orchestrated Obama Town Hall meeting [on CNBC], during which the president is now fully expected to announce that he not only managed to end the recession singlehandedly (what an opportune time for the NBER to announce its results), but that stocks are now ripping every single time he appears on TV (same goes for gold, oil, and pretty much everything else).”
Brian Sack, by the way, is executive vice president of the Markets Group at the Federal Reserve Bank of New York. He is also the Manager of the System Open Market Account for the Federal Open Market Committee. The Markets Group oversees domestic open market and foreign exchange trading operations and the provisions of account services to foreign central banks.
“$5 billion today, add another $6 billion on Wednesday and Friday, lever up 30 times and you have some $300 billion in free buying given to the Primary Dealers so they can ramp the S&P to 1,150 by the end of the month. Job well done Mr. President. Too bad nobody but Wall Street and a few HFT [high-frequency trader] prop desks care about the stock market any more,” Durden said.
Many optimistic analysts, such as Richard Berner, chief economist at JP Morgan, said a “big shock” would be a problem for an expected “moderate recovery.” However, he does not expect a double-dip recession because of lower rates and a strong refinance market combined with a strong global economy.
What exactly is this economist looking at?
I'm not sure people can save their homes through refinance if credit remains tight--lenders will not take a hit in the spread of a new mortgage; I'm sure those consumers who did refinance would not be able to spend much on anything but their mortgage; and, I don't see how other areas of the globe, like Europe, are coming back if U.S. consumers decide to stop spending--which they have.
But who cares...right? A stock market over 10,000 tranquilizes all of public opinion's anxieties.
Robert Michaels
Look at The Parthenon in Athens, Greece.
Behind that ancient Greek building lies a bankrupt country.
The threat of European debt default is one major factor that will lead to a major stock market crash in the United States. Stocks started to plummet this summer around fears of European contagion from default of Greek debt.
When asked if Greece is insolvent, as Nouriel Roubini claims, Greek Prime Minister George Papandreou told Bloomberg News that Greece is not going to default.
“We know where we were, we know where we are, and we know what we are going to do—and we are doing it,” Papandreou said.
When pressed with the question of Greece being insolvent, he added, “We are not going to default, and we have done everything we have done—not only us, not only Greece, but the European Union itself and the IMF [International Monetary Fund], of course, have basically given us a vote of confidence and we, ourselves, are following the targets. We are doing it, in fact, not to default. If we were going to default it would have happened, we would have decided that many months ago. We decided not to do that for a number of reasons. We think it would be wrong for the Greek economy, it would be wrong for the European economy, it would make things worse in the end. That is why we are taking the pain to make these structural reforms and we are on target.”
So, that means Greece is insolvent since he never said it wasn't. Here's more from ZeroHedge.com on Papandreou's comments that Greece is undervalued and their bonds will not currently be coming to market.
But, the European situation further weakens as layoffs continue.
BBC reported that defense company BAE Systems revealed plans to cut nearly 1,000 jobs at sites across the United Kingdom. Also this month, the Wall Street Journal reported Royal Bank of Scotland Group PLC will cut 3,500 positions in its back-office operations across the U.K., as it continues to shrink its businesses.
CNBC reported today that the UK's tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, and the government would “deduct what it deems as the appropriate tax and pay the employees by bank transfer.”
So, I guess for consumers in the U.K., they won't be spending much money either.
Just for an added dimension, in Amsterdam, Dutch express and postal company TNT NV said it expects up to 4,500 “forced redundancies” at its troubled mail unit, meaning 4,500 layoffs.
Look at monuments in the nation's capital that resemble Greek architecture. They hide another bankrupt country behind banks holding undervalued assets. The U.S. has more debt than Greece, but more stature as well.
With 125 bank failures this year, there are still nearly 770 problem banks on the FDIC watchlist—holding residential and commercial mortgages and construction and land loans that may never be paid. The FDIC is basically insolvent and/or bankrupt.
With billions to trillions in undervalued assets, not to mention unpaid derivatives, major U.S. banks hold capital reserves without the ability to lend—meaning no credit for businesses that need it.
The second phase of the stock market crash involves a paradigm shift in consumer spending.
Since consumer spending reflects 70 percent of gross domestic product, less consumer spending means lower levels in GDP and, likely, a double-dip recession. Roubini gives it a 40 percent chance. One economist in a high government position said it was a 25 percent chance. A double-dip recession, basically, goes down in history as Great Depression II.
Overleveraged consumers, people with too much debt, reflect one reason why consumers will not be spending money anytime soon. Unemployment, at U-3 9.6 percent/16.7 percent under U-6, is another reason.
A Wall Street Journal analysis of data from the Fed and the Federal Deposit Insurance Corp. suggests that “over the two years ending June 2010, banks and other lenders charged off a total of about $588 billion in mortgage and consumer loans. That means consumers managed to shave off only $22 billion in debt through...belt-tightening.”
Meanwhile, overleveraged states try to balance their budgets. As a result, more state and local government employees face potential layoffs. In Austin, Texas, for example, an American-Statesman analysis of agency budget requests showed $21 billion in red ink, and 9,800 jobs that state agencies offered up for elimination as legislators prepare to trim that money from the 2012-13 state budget.
Still, despite these facts, the stock market increases.
Looked at the columned buildings on Wall Street. The Dow Jones Industrial Average rose 145 points to 10,753 today while the 10-year bond yield declines and oil and gold increase. It looks like money is going everywhere—into equities and conservative investments—but trading remains “light.”
Perhaps the fact that the National Bureau of Economic Research reported today that the recession officially ended in June 2009 influenced investors. NBER also said economic conditions are not favorable. Some analysts believe we are not only in a depression but never left the recession.
As Harry Truman once said, “It's a recession when your neighbor loses his job; it's a depression when you lose your own.”
Still, the stock market keeps moving up.
There is a reason, albeit conspiratorial, as to why the stock market is able to show such productive gains among such moderate growth at best.
In an August 2009 article, the writer, Chris Martenson, presents an investigative report, The Fed Buys Last Week's Treasury Notes, as to why the market remains up.
“In concert with the claims I made in the prior Martenson Insider post, The Fed bought $7 billion in Treasuries today and even more yesterday. This is at the upper end of their recent range of already exceptional purchasing activity...If things are so rosy that every single dip is being bought in the stock market with a vengeance, I wonder why these printing operations are really necessary?
"This $14 billion plus buying activity by the Fed represents fresh money created out of this air that was exchanged for the sovereign debt of the US. However, since the Fed has, for all practical purposes, never undone its permanent operations (hey, that's why they are called "POMOs") we can consider these additions of money as good as permanent themselves.”
Martenson calls the following Permanent OMOs: “The purchase or sale of Treasury securities on an outright basis adds or drains reserves available in the banking system. Such transactions are arranged on a routine basis to offset other changes in the Federal Reserve’s balance sheet in conjunction with efforts to maintain conditions in the market for reserves consistent with the federal funds target rate set by the Federal Open Market Committee.”
According to today's ZeroHedge.com, Fed Injects Record $5 Billion Into Stock Market With Today's POMO, Tyler Durden said “Today's POMO is over, and the result is a whopper: Brian Sack has just injected a record for QE Lite $5.2 billion in stock, in order to complete all the elements of today's orchestrated Obama Town Hall meeting [on CNBC], during which the president is now fully expected to announce that he not only managed to end the recession singlehandedly (what an opportune time for the NBER to announce its results), but that stocks are now ripping every single time he appears on TV (same goes for gold, oil, and pretty much everything else).”
Brian Sack, by the way, is executive vice president of the Markets Group at the Federal Reserve Bank of New York. He is also the Manager of the System Open Market Account for the Federal Open Market Committee. The Markets Group oversees domestic open market and foreign exchange trading operations and the provisions of account services to foreign central banks.
“$5 billion today, add another $6 billion on Wednesday and Friday, lever up 30 times and you have some $300 billion in free buying given to the Primary Dealers so they can ramp the S&P to 1,150 by the end of the month. Job well done Mr. President. Too bad nobody but Wall Street and a few HFT [high-frequency trader] prop desks care about the stock market any more,” Durden said.
Many optimistic analysts, such as Richard Berner, chief economist at JP Morgan, said a “big shock” would be a problem for an expected “moderate recovery.” However, he does not expect a double-dip recession because of lower rates and a strong refinance market combined with a strong global economy.
What exactly is this economist looking at?
I'm not sure people can save their homes through refinance if credit remains tight--lenders will not take a hit in the spread of a new mortgage; I'm sure those consumers who did refinance would not be able to spend much on anything but their mortgage; and, I don't see how other areas of the globe, like Europe, are coming back if U.S. consumers decide to stop spending--which they have.
But who cares...right? A stock market over 10,000 tranquilizes all of public opinion's anxieties.
Robert Michaels
Summer Recovery Had Me a Blast
Previously, on last season's FIN TRUTH, the country was optimistic entering June when Treasury Secretary Timothy Geithner proclaimed “The Summer of Recovery.”
Happy Days are here again, the skies above are clear again, let us sing a song of cheer again, Happy Days are here again....
The discussion in the Treasury went something like this in June:
Tim “the Fonz” Geithner: This is the 'Summer of Recovery,' Ben. Dig it?
Fed Chair Ben “Richie” Bernanke: The economy is unusually uncertain, Tim. Why do you think it will recover this summer.
“Fonz” Geithner: Because I'm the Treasury Secretary....aaaayyyy (thumbs up).
However, with August unemployment at 9.6 percent, and the U-6 number (Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the of the civilian labor force plus all persons marginally attached to the labor force) at 16.7 percent, we remained far from recovery.
Back at the Department of Treasury:
Fed Chair Ben Bernanke: Tim, I thought you said this was going to be 'The Summer of Recovery.”
Geithner: Well, uh, I was wrrrr....I was wrrrrr....I just wasn't quite right.
Yes, Tim “the Fonz” Geithner spoke out of turn...as did Biden. CBS News in June reported that Biden later said "there's no possibility to restore 8 million jobs lost in the Great Recession.”
What do these guys think? Do they think they live in some television sitcom where whatever they say is true? That they can snap their fingers and the economy recovers...or hot-looking girls come running?
Fast forward to today:
In today's New York Times, Motoko Rich's For the Unemployed Over 50, Fears of Never Working Again, said: “Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly half of them have been unemployed six months or longer, according to the Labor Department. The unemployment rate in the group — 7.3 percent — is at a record, more than double what it was at the beginning of the latest recession.
“After other recent downturns, older people who lost jobs fretted about how long it would take to return to the work force and worried that they might never recover their former incomes. But today, because it will take years to absorb the giant pool of unemployed at the economy’s recent pace, many of these older people may simply age out of the labor force before their luck changes.”
And we continue to see signs of the bifurcated society—the haves and have-nots.
Bloomberg today reported Census Bureau statistics today that show most people earn more than 2.5 percent LESS than 12 YEARS ago. Median income in the United States is $1,323 lower than in 1998. For the bottom 10 percent of workers, median incomes are down 5.2 percent and for the bottom 20 percent, they are down 3.4 percent.
Meanwhile, the top 5 percent of workers make 3.6 percent more than in 1998. They make 11.4 times more than the poorest 10 percent, compared to 10.4 times more than the poorest 10 percent in 1998.
The poverty rate also rose to a 15-year high to 14.9 percent—now classified as poor.
And, Washington, D.C., Congress, is busted—a polarized, uncompromising body of politicians that can only agree on watered down legislation because they listen to their wallet with money from special interest groups and large corporations.
“We've seen it from the oval office to the Mayor's office, politicians are deeply unpopular these days and this new data from the Census Bureau and the Fed suggests the reason why. Even though the vast majority are working, the numbers show it is getting them nowhere. The American Dream of working hard and improving your lot is fading, and that shows in the new Census figures,” said Mike McKee, economics editor at Bloomberg.
McKee added that household wealth dropped 2.8 percent in the second quarter as home prices started to stabilize because the stock market tanked by $940.4 billion.
The fact is, Siemens recently announced 4,200 jobs lost by cutting its Siemens IT Solutions subsidiary, including 2,000 jobs lost in Germany.
Is Europe really not in fear of default? Nice stress tests for European banks since they did not count sovereign debt--still no explanation for that.
Then, there's Fedex, which announced earlier this month that profits doubled, and it was such positive news that they also announced 1,700 layoffs to reduce its trucking operations to save money.
But, there is good news. The Dow Jones Industrial Average is up this morning after three straight weeks of increases as CNBC says all is well. The Dow is at 10,635 this morning on Wall Street—Money Never Sleeps, opening this Friday at theaters near you.
And now, the season premiere of FIN TRUTH.
Robert Michaels
Happy Days are here again, the skies above are clear again, let us sing a song of cheer again, Happy Days are here again....
The discussion in the Treasury went something like this in June:
Tim “the Fonz” Geithner: This is the 'Summer of Recovery,' Ben. Dig it?
Fed Chair Ben “Richie” Bernanke: The economy is unusually uncertain, Tim. Why do you think it will recover this summer.
“Fonz” Geithner: Because I'm the Treasury Secretary....aaaayyyy (thumbs up).
However, with August unemployment at 9.6 percent, and the U-6 number (Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the of the civilian labor force plus all persons marginally attached to the labor force) at 16.7 percent, we remained far from recovery.
Back at the Department of Treasury:
Fed Chair Ben Bernanke: Tim, I thought you said this was going to be 'The Summer of Recovery.”
Geithner: Well, uh, I was wrrrr....I was wrrrrr....I just wasn't quite right.
Yes, Tim “the Fonz” Geithner spoke out of turn...as did Biden. CBS News in June reported that Biden later said "there's no possibility to restore 8 million jobs lost in the Great Recession.”
What do these guys think? Do they think they live in some television sitcom where whatever they say is true? That they can snap their fingers and the economy recovers...or hot-looking girls come running?
Fast forward to today:
In today's New York Times, Motoko Rich's For the Unemployed Over 50, Fears of Never Working Again, said: “Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly half of them have been unemployed six months or longer, according to the Labor Department. The unemployment rate in the group — 7.3 percent — is at a record, more than double what it was at the beginning of the latest recession.
“After other recent downturns, older people who lost jobs fretted about how long it would take to return to the work force and worried that they might never recover their former incomes. But today, because it will take years to absorb the giant pool of unemployed at the economy’s recent pace, many of these older people may simply age out of the labor force before their luck changes.”
And we continue to see signs of the bifurcated society—the haves and have-nots.
Bloomberg today reported Census Bureau statistics today that show most people earn more than 2.5 percent LESS than 12 YEARS ago. Median income in the United States is $1,323 lower than in 1998. For the bottom 10 percent of workers, median incomes are down 5.2 percent and for the bottom 20 percent, they are down 3.4 percent.
Meanwhile, the top 5 percent of workers make 3.6 percent more than in 1998. They make 11.4 times more than the poorest 10 percent, compared to 10.4 times more than the poorest 10 percent in 1998.
The poverty rate also rose to a 15-year high to 14.9 percent—now classified as poor.
And, Washington, D.C., Congress, is busted—a polarized, uncompromising body of politicians that can only agree on watered down legislation because they listen to their wallet with money from special interest groups and large corporations.
“We've seen it from the oval office to the Mayor's office, politicians are deeply unpopular these days and this new data from the Census Bureau and the Fed suggests the reason why. Even though the vast majority are working, the numbers show it is getting them nowhere. The American Dream of working hard and improving your lot is fading, and that shows in the new Census figures,” said Mike McKee, economics editor at Bloomberg.
McKee added that household wealth dropped 2.8 percent in the second quarter as home prices started to stabilize because the stock market tanked by $940.4 billion.
The fact is, Siemens recently announced 4,200 jobs lost by cutting its Siemens IT Solutions subsidiary, including 2,000 jobs lost in Germany.
Is Europe really not in fear of default? Nice stress tests for European banks since they did not count sovereign debt--still no explanation for that.
Then, there's Fedex, which announced earlier this month that profits doubled, and it was such positive news that they also announced 1,700 layoffs to reduce its trucking operations to save money.
But, there is good news. The Dow Jones Industrial Average is up this morning after three straight weeks of increases as CNBC says all is well. The Dow is at 10,635 this morning on Wall Street—Money Never Sleeps, opening this Friday at theaters near you.
And now, the season premiere of FIN TRUTH.
Robert Michaels
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