Personally, I think Rex Nutting's a commie, but he couldn't be more right about the fake news of "not in the labor force"

Rex Nutting is right. Our side has been trafficking in this piece of fake news for years, a factoid originating with Zero Hedge and endlessly repeated by the Goodyear blimp of gasbags Rush Limbaugh, touching all and sundry from Donald Trump on down to little known radio hosts on low power stations in Michigan like Steve Gruber in Lansing. Correct it try though you may, every attempt to stop it fails. It's embarrassing, not in the least because it exposes the endemic inability to think critically and the proclivity to believe in authorities which share your political opinions.

For all the good it will do, Rex Nutting goes once more unto the breach, here, with excellent links and a good graph, too:

There are a lot of “fake statistics” bandied about in service of some ideology or another, but I’d like to focus on just one example in which I have expertise from my work covering the monthly employment report over the past 20 years: The idea that there are 95 million Americans who are out of work but not counted as unemployed.

This statistic pervades the conservative discourse about our economy (or at least until Jan. 20). The implication of this statistic is that the government and media are lying to us. Instead of an economy that’s slowly improving as President Barack Obama has been telling us, our economy is actually a catastrophic failure, unable to provide any work for nearly 100 million people. ...

This is the perfect fake statistic, because it’s absolutely true. And completely meaningless.

Caroline Baum should be Treasury Secretary: She knows there's no reason even to think defaulting on the debt is possible

. . . unlike the rogues running the place currently, who are playing chicken with the full faith and credit of the US government.

Once again Caroline Baum cuts through the silliness and explains that there's plenty of revenue to pay what must be paid, here:

'The U.S. Treasury can’t cover all its monthly payments with incoming monthly revenue. But it can avoid default . . .. In any given month, the tax revenue flowing into the Treasury far exceeds interest payments — by a lot. Last month, for example, the Treasury took in $365 billion in tax receipts and made $21 billion in interest payments. For fiscal 2015, which ended Sept. 30, those figures are $3.2 trillion in tax receipts versus $402 billion in net interest. The U.S. government’s ability to service its debt — the principal can be rolled over — should not be an issue. But Treasury has made it one, claiming in 2011 and 2013 that it lacks the authority to prioritize debt payments, something households do all the time. ... [I]n written communications with the House Financial Services Committee in May 2014, the Treasury admitted that it would be “technologically capable” to prioritize debt payments.'

Obama says America is great right now, on same day his own Census Bureau reports people are 6.5% poorer than in 2007

Obama here.

Marketwatch here:

"The Census Bureau reported that median household income was $53,657 in 2014. That’s less than the 2013 median of $54,462, but not statistically different. What is of significance is that, when adjusted for inflation, the median household generated 6.5% less than they did in 2007, the year before the recession."

Index fund flows in 2014 may indicate the top is in, or nearly in

Seen here:

The impact of index funds has been revolutionary. When John Bogle, the founder of Vanguard, introduced the first vehicle designed to passively track the performance of a stock index about 40 years ago, it was derided as “Bogle’s Folly.” Today the fund’s successors, at Vanguard and elsewhere, hold $2 trillion in assets. ...

Actively managed funds still hold a majority of total stock fund assets, 63% at the end of September. But in the first nine months of 2014, actively managed stock funds attracted $2.5 billion, while $173 billion found its way into index funds, or 98.6% of the total.

This flood of money into index funds came after the market already had recorded substantial gains. [James] Stack contends that such lopsided affection for passive investing — and the lack of concern for risk that he infers from it — hints at an approaching top, as does the evidence of history.

“Generally, the times when index investing reaches the highest popularity are in aging bull markets or near market peaks,” he says.

There's the poverty level, and then there's "the working poor": United Way releases ALICE data

Key to ALICE calculations is assessing when more than a third of income goes to rent/housing, which usually happens when a good job goes away and is replaced by a lower-paying one, making the mortgage or the rent suddenly unaffordable. Rents have risen and become less affordable at the same time as the housing market has recovered from the 2011 lows. In the summer it was reported here that 52% of Americans have had trouble in the last three years covering either the rent or the mortgage. 

The Florida data is discussed here, where fully 45% of the households are in rough shape:

While 15 percent of Florida households are below the poverty level, another 30 percent are financially insecure — a figure that also applies to Sarasota and Manatee counties — based on a new measurement developed by the United Way. ... Florida's large number of financially fragile households is rooted in a number of economic trends, including housing affordability and other cost-of-living concerns. But the main driver is the dearth of middle-class jobs.

The Connecticut data is discussed here, where 35% of the households are struggling:

In Connecticut, the new report said, 10 percent of all households fall under the poverty level, and 25 percent are between the poverty level and the ALICE [asset-limited, income-constrained, employed] threshold. ... Similar ALICE reports have been done in a limited number of other states by their United Way organizations. Northern New Jersey was the first to shine a light on the ALICE population, and this year, for the first time, Connecticut, California, Florida, Indiana and Michigan United Ways have commissioned their own studies. Connecticut has the lowest proportion of residents below the federal poverty level and the lowest combined total in the ALICE category and below the poverty line of any of the states.

The housing riot: Average time in mortgage delinquency is 2.7 years nationwide, 4 years in New York State

Lawlessness and mayhem isn't just for po folk in Ferguson, Missouri, where law enforcement was overwhelmed by the bad actors doing millions of dollars in damage on the streets. Same goes for freeloaders in judicial mortgage states like New York where the authorities do not have the capacity to deal with the widespread problem of non-payment.

From Michael Sincere, here:

Millions of homeowners are already seriously delinquent. “The average length of time that houses remain delinquent nationwide is 995 days,” [Keith] Jurow says. “The worst culprit is New York State. The average delinquency period there is four years.” Many homeowners are aware that banks are not in a rush to file foreclosures, so they stay in their houses mortgage-free. “The banks are not initiating foreclosure proceedings because once the servicer forecloses, the lender takes a hit on earnings,” Jurow says. “They also have to manage the property, and most banks don’t want to do that.”

Rex "The Nut" Nutting commits drive by shooting of American savers, misunderstands excess reserves

The resident communist at MarketWatch weighs in here:

Sure, people need to keep some money handy to pay their bills and some folks might have a few hundred or a few thousand in a rainy-day fund, but no one needs immediate access to the equivalent of 11 months of income. In essence, there’s $10.8 trillion stuffed into mattresses. That $10.8 trillion hoard represents a failure of Fed policy. Since the Fed began quantitative easing in September 2012, U.S. households have socked away $1.17 trillion in their low-yield accounts. That means that 95% of the Fed’s $1.24 trillion QE3 ended up not in bubbly markets but in a safe and boring bank account.

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The $1.17 trillion since September 2012 is nicely represented in "excess reserves of depository institutions", which are up $1.21 trillion since that time. So sorry, Rex, the banks are holding on to that cash, not households. The reason? They must, to help comply with increased capital requirements under Basel III rules in the wake of the panic of 2008. That's the reason for QE, but no one wants to call it the continued bank bailout that it is while the rest of us continue to suffer without bailouts of our own. People might actually revolt if they did that, so it's best to call QE and its evil twin ZIRP necessary measures to prop up housing, employment and the like. To call it a bank bailout would just give it away, and we can't have that, now can we?

Savings deposits, meanwhile, are up less than $1 trillion since September 2012, to which, by the way, no one has "immediate access". Savings deposits are not "demand deposits" like checking accounts. It can take up to 30 days to get all your money out of savings, which now totals $7.38 trillion. Demand deposits at commercial banks, on the other hand, are up just $220 billion since September 2012, to $1.18 trillion, and total checkable deposits are up just $320 billion to $1.66 trillion. Not exactly a lot of money in a $17 trillion economy.

These savings, such as they are, aren't a failure of Fed policy. They are actually a repudiation of it by a part of the population which still possesses a cultural memory of the basis of capitalism.

Wake up and join the revolution, Rex.

January Margin Debt Was 5th Record High In A Row

Reported here:

Margin debt hit record levels at the end of January, according to New York Stock Exchange data. Margin debt at the end of January reached $451.3 billion, its fifth record month in a row. Margin debt returned and surpassed record levels set in July 2007 back in April when it topped $384.37 billion.

And Now A Word From The Paternal Fascists At Wells Fargo

Seen here:

“Retirement security is a shared responsibility between government, business, and individual and a system that is designed to motivate all stakeholders will drive the best outcome for Americans to achieve retirement security, said Joe Ready, director of Wells Fargo Institutional Retirement and Trust.

In the good old days your retirement was no one's responsibility but your own.

Home Buyers Using All Cash Hits All Time High

So says the National Association of Realtors, here:

Walt Molony, a spokesman for the National Association of Realtors, says that the association’s estimates of the share of the market made up by all-cash buyers are lower than the others, at 31% in July, but that they’re still at an all-time high. ... Molony says that investors make up 35% of all-cash buyers (70% of all investors pay cash), while retirees who’ve built up equity in their homes or paid off their mortgages account for 12%. The rest include vacation-home buyers and foreign buyers.

Old Yeller, New Yellen?

“When the time has come, am I going to support raising interest rates? You bet.” 

Janet Yellen, quoted here.

Cyclically-Adjusted p/e Above 20 Forecasts Near-Zero 10yr Returns

As discussed here by Mark Hulbert:

Where does the CAPE stand today?

It currently is at 23.3, which is 41% higher than its historical average. While the CAPE’s current level is not as high as the 40+ readings that were registered at the top of the internet bubble, it does not bode well for the next ten years. On average over the last century, the S&P 500 has produced a 10-year inflation-adjusted return of close to zero whenever the CAPE has been above 20.

To be sure, note carefully that this is a 10-year forecast. Even if it turns out to be accurate, it doesn’t mean the market will decline in a straight line between now and 2023. It wouldn’t be inconsistent with this forecast for the market’s impressive recent rally to continue for a while longer, for example.

politicalcalculations.blogspot.com

Hulbert is right. On March 1, 2000 the Shiller p/e stood at 43.22. For the thirteen years from March 2000 to March 2013, your return in the S&P500, adjusted for inflation and with all dividends re-invested, as been exactly +0.05% per annum.

Sort of like investing in a money market fund right now.

Ouch.

By the way, the Shiller p/e this morning stands at 24.14.

Paul Farrell's Latest AntiCapitalist Mess At MarketWatch Ridiculed Good

In the comments section, here.

"William Sisco" and "J.D." obviously know their stuff.

Zillow Recognizes 2012 Housing Value Increase Is Double The Norm

The final three months of 2012 marked five consecutive quarters of U.S. home value appreciation, and the near 6% annual jump is roughly double the historical average that has home values climbing about 3% a year, Zillow said.

“Good news for homeowners after years of poor performance,” Stan Humphries, Zillow’s chief economist, said in a statement. But Humphries cautioned consumers against expecting 2012-like gains in the future, saying we expect this recovery to continue into 2013, but at a more sustainable pace.”

The rest is here.

Without a driver for jobs, I see no reason for housing to appreciate at even 3% per year. In fact, prices today are within that percentage of the historical top of their range prior to the bubble. In other words, prices are still too high, historically, but Zillow isn't going to tell you that, at least not that way.

Buyer beware, imho.

Flashback 2008: McCain Called For Spending Freeze During Crisis. In 2012 Romney Won't.

Who is the more conservative, Mitt Romney, who has said he won't cut spending dramatically in his first year for fear of causing another recession, or John McCain, who was quite radical by current standards in calling for a freeze on spending?

September 26, 2008|Russ Britt

LOS ANGELES (MarketWatch) -- Sen. John McCain proposed a possible spending freeze on virtually every federal program except the Department of Defense, for veterans and entitlement programs in a presidential debate with rival Barack Obama Friday night. Obama countered that approach is too broad-based, saying it was the equivalent of "using a hatchet where you need a scalpel."

Anybody seen the scalpel? The debt back then was $10 trillion. Now it's $15 trillion. And we're no longer AAA.

Video here.

Central Bank/Institutional Gold Demand Is Running at 630 Tonnes Annualized

The pace of gold acquisition by central bankers and institutions looks to have picked up over 50 percent in Q2 2012 over the 400 tonne-pace set between March 2011 and March 2012, according to this story:

Demand for gold from central banks and official sector institutions more than doubled in the second quarter of this year to 157.5 metric tons from the same quarter a year ago, according to a World Gold Council (WGC) report released Thursday.

That marked a record quarter for central bank buying since the sector began recording net purchases in the second quarter of 2009, according to the WGC report. Central banks in Kazakhstan, Russia, Ukraine and South Korea were among the big buyers.

Can We Call It A Depression Yet?

2008 GDP in 2005 dollars didn't recover until 2011, and only just barely so. 

Per the latest revisions from the Bureau of Economic Analysis here, real GDP in 2005 chained dollars:

2008 $13.162 trillion

2009   12.758

2010   13.063

2011   13.299

2012   13.558.

I've written that I think we had a depression starting in 2008 when GDP declined from the previous year 2007, and that the depression ended based on reports of real GDP, but perhaps looked at from the point of view of chained 2005 dollars the depression ended just last year and not in 2010 as I've maintained previously.

Al Lewis for MarketWatch here disagrees:

The Great Depression that Federal Reserve Chairman Ben Bernanke claims to have averted has been part of the background radiation of our economy since at least 2008.

It’s just that like radiation — it’s invisible.

We’ve called it the recovery, the jobless recovery, the slogging recovery and more recently the fading recovery. We’ve measured modest growth in our nation’s gross domestic product to record that our so-called Great Recession ended in June 2009. And now we are saying that if this disappointing growth suddenly disappears, as currently feared, we will be in a new recession.

There is nothing more depressing than hearing about a new recession when you haven’t fully recovered from the last one. I take heart in suspecting that in a still-distant future, historians will look back with clarity and call this whole rotten period a depression.


Lewis' remarks at least show that calling what we've been through a "depression" is now possible in polite company.

I'd call that . . . progress!

June Unemployment 8.2 Percent: Every Month Under Obama Above 8 Percent

The government's unemployment report for June 2012 is here.

I'm sure Obama would just love to take credit for January 2009 when unemployment hit 7.6 percent. All 41 of his months in office are a sea of red on this chart, with no month below 8 percent unemployment.

Unfortunately Obama would then have to take credit for his massive and ineffectual February 2009 stimulus spending which his little Marxists like Rex Nutting at Marketwatch and elsewhere shift onto George Bush's fiscal year ending in summer 2009 to make Obama look like a tight wad when it comes to spending.

If I've still got a quarter left in my pocket on election day he can have it if Obama gets unemployment to 7.6 percent by then.

The Rational Thing To Do Is Get Out Of Bonds Now

So Mark Hulbert, here:

Given your belief that bonds in a decade’s time will be lower than where they are today, and the dismal failure of bond market timers to successfully time the market’s gyrations, the rational thing to do is get out of bonds now.

The New Global Fascist Order Slashes Dollar Borrowing Costs, But Not For You

It's not fascism when WE do it.

As reported here:

The U.S. Federal Reserve slashed the cost of emergency dollar loans to foreign banks as the world’s major central banks took coordinated action to prevent Europe’s debt crisis from triggering a global liquidity crunch.

The moves were announced in statements issued simultaneously by the U.S. Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan, the Bank of Canada and the Swiss National Bank. ...

“Global central banks are opening the spigots and the casualty has been the dollar,” said Kathleen Brooks, research director at Forex.com.

“The extension of the dollar swap lines essentially means that dollars will be available cheaply and on request for the next 15 months to Europe’s troubled financial sector, which will probably greedily eat them up after being starved of much-needed dollar funding since the summer.”

Meanwhile the US consumer's liquidity crisis continues apace:

hours worked remain flat year over year;

real wages have declined nearly 2 percent year over year;

housing values have declined $6.6 trillion since 2006;

owners' equity in real estate is down $6.9 trillion since 2005;

household net worth is down $5.55 trillion since 2006;

unprecedented unemployment above 8 percent has continued for 33 months straight;

the US dollar has declined 27 percent in value in ten years;

debt delinquency rates are running at 10 percent;

open credit accounts have declined by 23 percent since 2008;

the annual percentage rate on the average credit card is nearly 15 percent;

a three year new car loan will cost you nearly 4.5 percent;

a 30 year mortgage will cost you 4 percent, if you can get one;

and the bank pays you doodily squat on your savings.

But if you're a European bank, the US Federal Reserve is making a gift of loans at just 0.58 percent:

The new [dollar swap] pricing will be applied to operations starting on Dec. 5. Seven-day loans would carry an interest rate of about 0.58 percent, down from 1.08 percent, based on the current one- week OIS rate of 0.08 percent.


The bankers' bank has picked its winners again. And you aren't one of them.