Friday, July 26, 2013
If QE Is Helping Only The Financial Sector, Maybe It Was Meant To
Robert Skidelsky in The Economist here, referencing John Kay in the Financial Times:
"All of this led John Kay to wonder why so much attention was given to unconventional monetary policies ‘with no clear explanation of how they might be expected to work and little evidence of effectiveness?’ His answer: they are helpful to the financial services and those who work in them."
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QE is medicine for sick banks, not sick economies.
Corporate Cash Sets Another Record At $1.093 Trillion, Liabilities Climb To $5.9 Trillion
Bob Pisani reports here:
"Cash set a record in the first quarter of 2013 on an absolute basis: $1.093 trillion in the S&P 500. It has set a record for 18 of the last 20 quarters."
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Yeah, but nonfinancial corporate business sector bond liabilities have climbed, too, from $3.7 trillion in 2007 to $5.9 trillion in the latest report.
Financial business sector bond liabilities have declined from $6.2 trillion to $4.9 trillion over the same period.
Thursday, July 25, 2013
Did Bernanke Honestly Think Employment Was Improving Significantly On May 22nd?
The more I think about the first time claims for unemployment data this year, I think it's very possible Ben Bernanke got a little ahead of himself on May 22nd with his admittedly mere hint of tapering, thinking there was real improvement in the unemployment picture. And there seemed to be.
In the run up to his May 22nd comments, there had been a string of 13 weeks averaging 320,538 first time claims per week, which translates into an annualized level of 16.6 million, something this country hasn't seen since 2006-2007 under George W. Bush, two years which were the best this country had seen the whole decade, and remain so. In other words, Ben Bernanke may have felt free to hint at tapering bond purchases later in the year if the numbers over the three months which he had just witnessed carried forward through the rest of the year. Entirely understandable.
Everybody went nuts over the tapering remark, which was really just a response to Rep. Brady's question. But Ben must have been seeing what careful observers were seeing: some of the best first time claims data of Obama's presidency. That said, the number of careful observers are few, and most people do not think much about the not-seasonally-adjusted numbers, let alone the long term comparisons.
Things have deteriorated since then, of course, but in the late winter and early spring, first time claims for unemployment were in fact looking much better.
QE-Induced Savings On Interest Expense Accounts For 47% Of S&P500 Earnings Growth Since '09
So says Robbert van Batenburg, quoted here:
"People underestimate the extent to which quantitative easing has benefited the S&P," said Robbert van Batenburg, director of market strategy at brokerage Newedge USA LLC in New York. He called the effect akin to "an athlete on steroids." The Fed's effect on corporate earnings is difficult to quantify. Van Batenburg estimates that corporate savings on interest expense after rates fell to historic lows has accounted for about 47 percent of S&P 500 earnings growth since 2009. At the end of 2009, quarterly earnings per share for the S&P 500 were less than $20, and companies in the index paid about $4 a share in interest, van Batenburg said. Now the S&P 500 is generating about $26.70 a share in quarterly earnings but pays just $1.50 a share in interest.
Revenues Show Global Economy In Full Retreat
Jeffrey Snider, here:
What feels like a still-recovering recovery to so many looks far different in comparison to the real recession that was already in full swing in 2008 – the fact that so many companies and so much of the economy is running below 2008 rates is very revealing and startling in its implication. It should be even more remarkable aside the fact that QE 3 & 4 are right now being pushed into “markets”, and that a renewed housing bubble is building next to myriad other asset bubbles.
There is no hiding the fact that the global economy, including the US, is in full retreat. Investors and observers may choose to ignore it, but that just makes their game of waiting for recovery all the more curious.
Wednesday, July 24, 2013
Economic Stress: Almost Half Of TARP Funded Mortgage Mods Redefault
As reported here:
While HAMP has helped about 865,100 homeowners avoid foreclosure over the lifetime of the program through permanent loan modifications, more than 306,000 homeowners had redefaulted on their modified mortgages as of the end of April, the report stated.
Supremes Slap Down Imperial Obama 3x In Last 18 Months In Property Cases 9-0
Story here:
"Horne was the administration's third unanimous defeat in a property rights case in 18 months."
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It's not just the Fifth Amendment which has been under attack by the Obama regime, either. The Supremes also handed down two unanimous defeats in First and Fourth Amendment cases in 2012.
America, are you listening? Your president hates your constitution.
Tuesday, July 23, 2013
How Bernanke Moved Mortgage Rates Up Nearly 25% On May 22nd
Quoted here May 22nd:
“If we see continued improvement [in the labor market] and we have confidence that that is going to be sustained, then we could in -- in the next few meetings -- we could take a step down in our pace of purchases.”
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The rate was 3.51% on May 16th. On July 18th it's 4.37%.
IRS Political Targeting Scandal Goes All The Way To The Top
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| pappastax.com April 2009 |
Peggy Noonan, last week here:
The IRS scandal was connected this week not just to the Washington office—that had been established—but to the office of the chief counsel. That is a bombshell ... Mr. [Carter] Hull told House investigators that at some point in the winter of 2010-11, Ms. [Lois] Lerner's senior adviser, whose name is withheld in the publicly released partial interview transcript, told him the applications would require further review:
Q: "Did [the senior adviser to Ms. Lerner] indicate to you whether she agreed with your recommendations?"
A: "She did not say whether she agreed or not. She said it should go to chief counsel."
Q: "The IRS chief counsel?"
A: "The IRS chief counsel."
The IRS chief counsel is named William Wilkins. And again, he is one of only two Obama political appointees in the IRS.
Monday, July 22, 2013
John Kass: Obama Played The Race Card On Purpose To Divide America
John Kass, Greek-American, channels Aristotle here in the Chicago Tribune:
Obama pronounced the killing as racially motivated, though he didn't use the words. He didn't have to, such is his prowess. It was so smooth that few noticed. He put the killing in a racial context, and that was enough. ... Race was established by the president of the United States, and by other political and media actors. It's a cynical business, about money and power, about keeping divisions between American tribes. There are the black tribes that see Martin in the context of the old civil rights struggles and leverage, and white tribes that see Martin being used to pummel them with racial guilt. ... Yet none of this tribalism has anything to do with what happened the night Martin was killed. Politicians don't worry about that. They're experts at the game of tribes, and a tribal America is what nourishes them.
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"The tyrant should endeavor that the whole community should mutually accuse and come to blows with each other." -- Aristotle, Politics V
Sunday, July 21, 2013
Currency In Circulation Under Obama Is Increasing By A Factor 31% Higher Than Under Bush
Currency in circulation under George W. Bush increased nearly 51% between November 2000 and November 2008, according to the Federal Reserve, here. Over the course of his 96 months in office, that's a factor of .529. The measure of currency under Bush went from $571 billion to $861 billion.
Currency in circulation under Barack Obama increased nearly 39% from November 2008 to July 17, 2013. Over the course of his 56 months in office, that's a factor of .696. The measure of currency under Obama so far has gone from $861 billion to $1,196 billion.
That means the increase in the currency in circulation under Obama is 31.6% higher than it was under George Bush.
Currency in circulation includes coin and currency held in vaults of banks in addition to coin and currency held by the public.
Why did M1 have its largest drop ever the week ending June 10th?
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| weekly change in $billions |
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| June 3, 2013 to date |
Did you know that the largest negative weekly change ever in M1 money stock in nominal terms occurred just recently on June 10th?
$109.4 billion was pulled from M1 the week ending June 10, 2013, which is money in circulation and the money on deposit in your checking account.
The swings in M1 money stock in June have been as dramatic as the swings were when America was attacked on 911.
Here are the figures from September 2001:
9-10-2001 + $001.2 billion
9-17-2001 + $124.5 billion
9-24-2001 - $086.1 billion
10-1-2001 - $034.1 billion
But look at what just happened in June:
6-03-2013 + $085.0 billion
6-10-2013 - $109.4 billion
6-17-2013 - $014.4 billion
And a measly $10 billion net has been added to M1 in the interim to July 8th.
So what terrible cataclysmic, earth shattering, civilizationally-threatening event occurred the week ending June 10th, 2013?
Baccalaureates everywhere?
Actually, as a percentage of total M1 the 911 addition to M1 represented nearly 10% of total M1 on the same date. In June 2013 the decline in M1 wasn't even 4.5% of M1.
Still, it's a disturbing indication of turbulence at the most basic level of the economy, the money in your pocket and in your checking account.
Inflation-Adjusted Hourly Earnings Up Just 2.5% Over 8 Years, But Down 1.8% Since 2011
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| average annual figures shown |
Real hourly compensation is up just 2.5% from 2005 through 2012, but down 1.8% from the 2011 peak.
Manufacturing Jobs Remain Down 8.3% Under Obama
Manufacturing jobs remain down 8.3% since Obama was first elected in November 2008, nearly five years ago.
The decline under almost eight years of George W. Bush was a whopping 22.7% (this data series begins in April 2001).
Recovery of manufacturing jobs under Obama began to flat-line in February 2012, over a year and a half ago.
Steve Clemons Of The Atlantic Discovers U6 Unemployment 5 Years Into The Biggest Story Of Our Time
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| Don't tell Steve Clemons U6 has been measured since 1994 |
Except he doesn't really discover it until the commenters clue him in to the fact.
Here's the relevant snip assuming Leo Hindery Jr. must be a god for discovering the truth about the real extent of unemployment:
"In other words, BLS reports that official unemployment stayed flat at 7.6% while Hindery's more extensive figures show that real unemployment increased by 0.4% to 14.3%."
Then two commenters, one of which is "dormilon" below, break the bad news to Clemons in the comments section:
"I was equally confused by what appears to be the author's lack of familiarity with the 'alternative measures for labor utilization.' The BLS doesn't just issue one set of unemployment estimates (U-3) as implied above (For decades, the only employment numbers that anyone would discuss were those issued by the Bureau of Labor Statistics (BLS).), it issues an array of estimates that are disseminated with varying degrees of acceptance or familiarity. And, yes, that U-6 number should definitely be much better understood and publicized."
Commenter "Dcoronata" then goes in for the kill:
"Once you start an article the way you did, sophisticated readers already know not to bother. If the rules have not changed, then there is no duplicity, just bad journalists."
Clemons took it personally:
"Your comment borders on ad hominem."
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No, I'd say it is most definitely ad hominem. Face it, Steve, you're a dumb shit, and a liberal who hasn't cared about the biggest story of our time until someone you esteem told you to care about it. There is no "Deception in Counting the Unemployed" as Steve's headline indicates, just bipartisan indifference about it.
Saturday, July 20, 2013
What A Coincidence. Mortgage Debt Outstanding Has Dropped $1.3 Trillion Since 2009 . . .
. . . and the Fed just happens to have $1.2 trillion of MBS on its balance sheet today, about a third of which the Fed has acquired in the last nine months. The Fed currently owns over 9% of the face value of all mortgage principal owed. The decline in total mortgage debt outstanding since 2009 is also just over 9%. Hm.
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