Roubini: Corporate Profits Came on Backs of Unemployed

Ambrose Evans-Pritchard reports on the Ambrosetti conference at Lake Como, where Nouriel Roubini made the remark:

Dr Roubini said US companies have plenty of cash but are boosting profits by a policy of “slash and burn” on labour costs. “We’ve lost 8.4m jobs and if you include the loss of hours worked it is equivalent to another 3m. We need to generate an extra 450,000 jobs every month for three years to get it back,” he said.

For more go here.

"King" Quotation on New Oval Office Rug Belonged to Theodore Parker

Martin Luther King Jr.'s freewheeling habit of quoting without attribution plagiarism is now memorialized on the new rug in Obama's Oval Office.

The story is here.

On "Gin"

This limerick’s for purging my sin,

Ousting lust and desire from within,

Which leaves oodles of space

For agape and grace,

Plus humility, virtue, and gin.

-- Robin Kay Willoughby

The Keynesian Stake in the Term "Depression"

The Keynesians need it to be a depression as much as the Austrians, and John Judis of The New Republic explains the former's point of view, here:

In its basic contours, the current downturn is much more similar to the depressions of the 1890s and the 1930s than to the post-World War II recessions. 

ZIRP is Legalized Theft

The line of the day comes from Chris Whalen, writing at Reuters.com here about the damage the Fed's zero interest rate policy is doing to the country:

Fed Chairman Bernanke and the other members of the FOMC are killing the real economy to save the banks — but none of the benefit flowing to the banks is reaching US households. In fact, the Obama Administration has been providing political cover for the Fed to conduct a massive, reverse Robin Hood scheme, moving trillions of dollars in resources from savers and consumers to the big banks and their share and bond holders.

Read the rest at the link, at your peril.

Problem Bank List Update: 829, or 2500?

The latest data on problem banks has been updated by the FDIC, showing an increase from 775 in the first quarter to 829 in the second, according to this story. An unofficial list of the problem banks receives regular updating here.

Compare that with these remarks from an anonymous commercial banker from California offered at Mish's blog here in an on-going series of posts about insufficient loan loss provisions at banks:

In my estimation, if every bank had the collateral of all loans accurately appraised and each loan’s loan grading was finely tuned for an expected loss based on financial performance and collateral values, the number of essentially bankrupt banks in this county would increase by a factor of 4-5 from the current level.

In other words, there is a potential pool of 2000-3000 banks that would be on the FDIC radar's for getting closed.

The health of the industry is not accurately reported by any means.

What continues at the heart of this issue is asset valuations and the accounting rules which govern them. Banks want the most liberal rules they can get, while taxpayers who end up footing the bill for bank malfeasance do not. Elected government officials and unelected bureaucrats in the middle have been and continue to be on the bankers' side, with a few notable exceptions, at a horrible cost to the taxpayers, who rightly feel that they have no voice.

And that's a big part of what all the fuss is about as the midterm elections loom.

Rule By The Rich: Do They Really Need Their Salaries of $3.83 Million?

2009's top congressional millionaires consist of ten senators and twelve representatives, in order from top to bottom as follows:

1. Sen. John Kerry, D-MA, $188.6 million

2. Rep. Darrell Issa, R-CA, $160.1 million

3. Rep. Jane Harman, D-CA, $152.3 million

4. Sen. Jay Rockefeller, D-WV, $83.7 million

5. Rep. Michael McCaul, R-TX, $73.8 million

6. Sen. Mark Warner, D-VA, $70.2 million

7. Rep. Jared Polis, D-CO, $56.5 million

8. Rep. Vern Buchanan, R-FL, $53.5 million

9. Sen. Frank Lautenberg, D-NJ, $49.7 million

10. Sen. Dianne Feinstein, D-CA, $46.1 million

11. Rep. Alan Grayson, D-FL, $31.1 million

12. Rep. Nancy Pelosi, D-CA, $21.7 million

13. Sen. Jim Risch, R-ID, $20.1 million

14. Rep. Rodney Frelinghuysen, R-NJ, $19.9 million

15. Rep. Gary Miller, R-CA, $19.4 million

16. Sen. Bob Corker, R-TN, $18.3 million

17. Sen. Claire McCaskill, D-MO, $15.7 million

18. Rep. Kenny Marchant, R-TX, $15.6 million

19. Rep. Nita Lowey, D-NY, $15 million

20. Rep. Carolyn Maloney, D-NY, $14.1 million

21. Sen. Olympia Snowe, R-ME, $12.6 million

22. Sen. Lamar Alexander, R-TN, $12.1 million.

Altogether they represent wealth of $1.15 billion. Twelve are Democrats, seven of whom are in the top ten and six of whom are in the senate, worth $744.7 million. Ten are Republicans, worth $405.4 million,  three of whom are in the top ten and four of whom are in the senate.

TheHill.com has the complete story here and here, published annually.

GDP for Q2 2010 In Context

"Historically, four quarters following a bottom in GDP, growth is running over a 6% annual rate. Rejoicing over 1.6% because it wasn’t 1.4%, particularly in the context of the most radical bailout, monetary and fiscal stimulus in U.S. history, totally misses the point that we are operating in a totally abnormal and fragile economic environment."

-- David Rosenberg, quoted here

Set 'Em Up, Joe

A glass of wine a day is better for longevity than none (and better than the whole bottle), according to a new study following out-patients aged 55-65:

1,824 participants were followed for 20 years. ... Just over 69% of the never-drinkers died during the 20 years, 60% of the heavy drinkers died and only 41% of moderate drinkers died.

Read all about it, here.

New Republican Record in Gallup Weekly Tracking Poll

Gallup reports that registered voters prefer Republicans to Democrats by 11 points, besting the 1994 5-point record, which preceded the ascendancy of Newt Gingrich and the Contract With America while Bill Clinton was president.

The poll dates to 1942.

Go here for the whole thing.

You'd Know It's a Depression If . . .

. . . 50 million Americans getting Medicaid, stopped getting it (cost $273 billion);

. . . 40 million Americans getting Food Stamps, stopped getting them (cost $70 billion);

. . . 10 million Americans on Unemployment, stopped getting it (cost $160 billion);

. . . 4 million on Welfare, stopped getting it (cost $22 billion).

The total current cost of these safety net programs: $525 billion.

Read all about it, here.

"Bond Markets Tell Us We Are Already In Depression"

Ambrose Evans-Pritchard had a memorable line in a posting July 27th which is apropos after Friday's stock market rally despite so much bad GDP news yesterday:

As David Rosenberg at Gluskin Sheff reminds us eloquently every week, the bond markets are telling us that we are already in a deep and intractable depression – which does not preclude Japanese-style rallies, technical recoveries, and bursts of growth, all within a Kondratieff Winter.

GDP for Q2 2010 at 1.6%

The advance estimate of GDP for Q2 2010 was revised down today to 1.6% from 2.4%, on surging imports and slower growth in corporate profits. The latter, according to news reports, came in at an increase of 2.9% in the second, off fully 50% from the Q1 rate of 5.8% growth in corporate profits.

The next revision to GDP is expected at the end of September.

The data is here.

Federal Reserve Appeal Denied, Continues to Stymie to Protect Banksters

Bob Ivry for Bloomberg News is reporting that the Federal Reserve's appeal in May of a March ruling requiring the Fed to disclose information under the Freedom of Information Act has been denied as of August 20:

The full U.S. Court of Appeals in New York, in a docket entry dated Aug. 20, denied a May 4 request by the Fed to review a three-judge panel’s unanimous March 19 decision requiring the agency to release records of the unprecedented $2 trillion U.S. loan program begun primarily after the 2008 collapse of Bear Stearns Cos.

Unless the court stays its decision, the Fed will have seven days to disclose the documents. In the event of a stay, the central bank and the Clearing House Association LLC, an organization of 20 commercial banks that joined the Fed in defense of the lawsuit, will have 90 days to petition the Supreme Court to consider their appeal. The Clearing House has already said it will ask the high court to rule on the case. ...

The amount the Fed and the U.S. government lent, spent and guaranteed to stem the recession and rescue the banking system peaked in March 2009 at $12.8 trillion, most of it following the September 2008 bankruptcy of Lehman Brothers Holdings Inc.

Go here for complete coverage by Bloomberg.

About That Failure of ShoreBank, Chicago, Illinois

Here's what Mish has to say about it after excerpting reports from Bloomberg, The Wall Street Journal and Zero Hedge:

This is what matters: It is crystal clear there were irregularities in attempting to keep this turkey of a bank alive, irregularities in who was allowed to bid, irregularities in selling the assets to failed management, and a suspicious single bid by a consortium of large US financial institutions, including Bank of AmericaCorp., Goldman Sachs Group Inc. and Morgan Stanley.

The FDIC's handling of Shore Bank smells as bad as a pile of dead alewives on a Chicago beach in mid-July.

Read the rest, here.

David Stockman Hates America

David Stockman's latest screed against PIMCO reveals what a creature of his age he has become:

"Housing is a commodity like furniture and automobiles, and inducing citizens to buy more of it is no business of the state."

In truth everything is a commodity to people like David Stockman, and that he'd much prefer a world which puts more people into that category, as the tenants of landlords, says it all.

Without realizing it, he puts his finger on the problem with what has happened in America in our lifetimes. Everything got commodified, not just our jobs, and now our mortgages, but our very selves. It happens to people who forget where they came from, who they are, and God. That we let the vampires get a hold of the American dream and make a bundle off it is only the most acute and visible example of it. It is almost quaint how Stockman likens what's happened to indentured servitude, as if his remedy doesn't resemble the same.

With mortgage securitization, the American dream got carved up, packaged and sold off to the highest bidder like so many sausages at the meat counter. But the intangible assets of four walls and a piece of ground mean nothing to David Stockman. Privacy, peace and quiet. Some flowers for the table and tomatoes for the pasta, the companionship of pets and a place to bury them when they're gone. The sound of the wind blowing through the trees. The glory of a red maple leaf against a blue sky. The goldfinch, the bluejay, the robin, and crows as big as coons. The snowman standing where bright green grass once called you to mow it. Where families gather to give thanks once a year for our many blessings, in spite of it all.

If that makes me a slave, I'll own it. Someone's banking on it, and not just Bill Gross.

The Desperation Index: Bull Market in Lotto Tickets and Metal Detectors

BusinessWeek.com is reporting here that lotto ticket sales increased 1.5% in the fiscal year just ended, making the North American lottery business larger than $70 billion. Metal detector sales have also jumped.

Follow the link for the whole story. 

Price to Earnings Ratios

John Hussman has an important article here on price to earnings ratios, in particular "forward earnings ratios," which came into vogue in the 1980s and for which there have not been adequate historical series preceding that era. 

In other words, forward earnings ratios are an innovation of the greatest bull market era in American history, and thus they are an outlier.

Follow the link for the complete story. 

"Moochelle": Michelle Obama's New Name

Given to her by none other than Rush Limbaugh:

We have a name for Michelle: "Moochelle." Mooch, mooch, Moochelle Obama. That will tick 'em off, won't it, Snerdley?  

Moochelle Obama.  You compare her with the hated Sarah Palin. Moochelle Obama keeps a personal staff of 24.  Now we know why: To administer to gynecologist friends whose fathers pass away.  Her personal staff includes a makeup artist and a hairstylist, a total annual government salary of more than $1.6 million for the personal staff of Moochelle Obama, plus their travel expenses.  Her Secret Service for security is extra on these trips.  Now, you compare and contrast that with the hate and the ridicule that is thrown at Sarah Palin who did what?  She sold the governor's jet, she dismissed the government's cook, she prepared her own meals, she returned the governor's automobile and drove her own car, she dismissed the governor's security staff, and knows how to use her own gun.  So Michelle's gynecologist, her father died.  So she needed to go to Spain to sort it all out.  All right, there you have it.  That's why.

The whole thing is here.

The Choice Wasn't "Do Bailouts" or "Do Nothing"

Barry Ritholtz provides a very succinct summary of what were the alternatives to the bailouts of 2008, and takes to task those who want to defend the bailouts as if doing nothing were the alternative.

Don't miss it here.