Mish's Global Economic Trend Analysis: Constitutional Crisis in Argentina, President Threatens to Take Over Central Bank; Potential Latin America "Cascade Effect"

Constitutional Crisis in Argentina, President Threatens to Take Over Central Bank; Potential Latin America "Cascade Effect"

Maybe it'll cascade to our state banks-

Yeah, but who really wants to be the waterfall-guy?

Push keeps meeting shove, financially.

Now for some REALLY important news:
My Way News - Cowell says he's leaving `Idol' for `X Factor'

AIG, autos offset Treasury bank bailout profits

WASHINGTON Mon Jan 11, 2010 5:16pm EST

WASHINGTON (Reuters) - U.S. taxpayer profits from bank bailout investments are being offset by estimated losses from American International Group and automakers and mortgage payment cuts for struggling homeowners, a U.S. Treasury report showed on Monday.

Cinco-X wrote:

Doesn't this mean the economy is recovering?

It means U.S. demand is recovering and south China's economy is recovering

Rajesh wrote:

It means U.S. demand is recovering and south China's economy is recovering

You did catch the "WINK" at the end, right?

SEC Orders AIG Info Sealed Until November... 2018!

THIS is TOTAL Horseshit! ........ this is a perfect example of thieves running government.

Juvenal Delinquent wrote:

statute of limitations

We use to run that play in street football

On Track for 14% Unemployment

By Louis Woodhill

Six months ago I caused a bit of a stir with the statement, "Accordingly, we can expect unemployment to rise to about 14% within a year unless the downward slide of (private business investment) is reversed." Well, if the next six months are a replay of the last six, the unemployment rate in June 2010 will be the equivalent of 13.4%.

Before I go any further, I need to point out that, given the way the government's "headline" unemployment rate is calculated, it can never reach 14%. This is because the civilian labor force includes only people who are working or have looked for a job in the previous four weeks. When the economy gets really bad (like now), unemployed workers get discouraged and give up looking for jobs. This causes the civilian labor force to decline as fast or faster than total employment. This, in turn, has the effect of keeping the "headline" unemployment rate artificially low.

Unfortunately, the American people don't experience government statistics-they experience reality. And, the reality is that we are on a straight-line path toward the equivalent of 14% unemployment. Here is what I mean.

In June 2009, the "civilian non-institutional population 16 years and over" was 235.7 million. Of these, 65.7%, or 154.8 million, were in the civilian labor force. Of these, 90.5% had jobs, yielding an official, "headline" unemployment rate of 9.5%.

The reported unemployment rate for December was "only" 10.0%. However, if labor force participation had remained at June's 65.7% level, the unemployment rate would have been reported as 11.5%-almost halfway to my prediction of 14% by June 2010.

During the second half of 2009, total employment declined by 2.2 million jobs. However, so many people became discouraged about their job prospects that the "civilian labor force" was 2.6 million lower than it would otherwise have been. This is why the December unemployment rate was reported at 10.0% rather than 11.5%.

According to last Friday's Bureau of Labor Statistics (BLS) report, total employment declined by 589,000 jobs in December. This is considerably higher than the average monthly job loss for all of 2009, which was 450,000. Accordingly it would not be unreasonable to project that, in terms of employment, the first half of 2010 will resemble the last half of 2009. If this occurs, unemployment (adjusted to a labor force participation of 65.7%) will reach 13.4% in June and 14% in August.

Economists in and out of the administration are proclaiming that, "the recession is over". This may be, but it doesn't mean that hiring will resume. The economy grew at a 2.2% annual rate in the third quarter of 2009 while total employment declined by 1.3 million. It is quite likely that the economy also grew in the fourth quarter, when total employment fell by almost 1.0 million. This process-rising GDP and falling employment-could go on for a long time. Here's an example of how.

When Circuit City went bankrupt, 34,000 people lost their jobs. However, no one has had to go without a flat screen TV because Circuit City closed. They just go to Wal-Mart or Best Buy. Competitors have been able to handle Circuit City's customers while adding few, if any, additional workers. Lots of struggling retailers could close and throw their workers onto the unemployment rolls without impacting GDP at all.

The huge Federal deficits are squeezing capital out of the private sector. When Circuit City was liquidated, the capital that was liberated went to pay off its debts. The banks and bondholders did not turn around and lend this money to Wal-Mart. Incrementally, they bought government bonds with it.

News reports say that the big banks are not making loans. This is not true. They are lending to the Federal government. They are doing this, not only buy buying government bonds directly, but by parking their reserves (which have increased by more than $1 trillion since the economic crisis hit) at the Federal Reserve, which is paying above-market interest on them. This allowed the Fed to buy $900 billion of mortgage-backed securities from entities like PIMCO, who turned around and bought-you guessed it-government bonds.

At the same time that it extracts capital from business, the "stimulus" bond sales are squeezing jobs out of the private sector. Unfortunately, most of the policy actions being considered to "create jobs" involve doing more of this.

Government is force. All government can do is to point a gun at someone and tell them that they can't do something that they want to do, or that they must do something that they don't want to do. Given that free markets are always trying to direct resources to their most profitable uses, any direct government intervention in the economy will make things worse. This negative impact shows up most quickly in total employment.

For example, there is talk of a program to force banks to lend to small businesses. Unfortunately, the capital the banks would lend under such a program would have to come from somewhere. The "jobs created or saved" by the new program would be trumpeted on "recovery.gov", but the jobs destroyed by draining capital from other areas would show up as lower total employment. This is exactly what has happened since the $787 billion "stimulus" bill was passed.

Recovery.gov claims that "stimulus" has "created or saved" 640,329 jobs since February 1, 2009. During this same period, the economy has shed 4.4 million net jobs and the unemployment rate (adjusted to a labor force participation rate of 65.7%) has risen from 7.7% to 11.5%. If we don't change course, get ready for (the equivalent of) 14% unemployment.

David Backus and Thomas Cooley: Global 'Imbalances' and the Crisis - WSJ.com

By DAVID BACKUS AND THOMAS COOLEY

In the 1920s, capital began flowing from Massachusetts to North Carolina, a process that continued until after World War II as textile mills migrated to the South from New England. Beginning in the 1950s capital moved again as textile manufacturing moved to Mexico, India and Malaysia. Capital has long moved to where it can be used most productively, and by and large, that has been a good thing.

Whether capital moves within a country or between countries, its flow addresses imbalances between available local capital and uses for capital (otherwise known as investments). Through much of history, the major capital flows have been from rich countries to poorer ones. England financed canals in this country and railroads in Australia and India.

That's no longer the case. The most notable importer of capital in recent times has been the United States. Australia, Spain and the United Kingdom have also been importers of capital. Germany, Japan, China and Switzerland have been significant exporters of capital. Over the past 10 years, oil-exporting countries have been exporters of capital. (More)

Juvenal Delinquent wrote:

In 2020 hindsight, I wonder what skeletons will be found in the closet?

We only need to wait until 2018, right?

Black Star Ranch wrote:

THIS is TOTAL Horseshit!

If you needed to know, they would tell you.

Black Star Ranch wrote:

THIS is TOTAL Horseshit! ........ this is a perfect example of thieves running government.

Yep, it sure looks that way, from yesterday

Ken Lewis and John Thain Are Off The Hook

The SEC said today that it will not file civil charges against any individuals, including executives and directors, in relation to the company's takeover of Merrill Lynch.

can we deport them to Dubai?

The refs have swallowed their whistles, no penalties.

Could this be inventory replacement? I didn't do much Xmas shopping, so I wasn't staring at the shelves. If it is a consumer rebound, oil has been signaling this.

Currently the SEC commissioners are chair Mary L. Schapiro (D), Kathleen L. Casey (R), Elisse B. Walter (D), Luis A. Aguilar (D) and Troy A. Paredes (R)............I'd sure like to find out what the reasoning of this AIG order was, AND, why is it just now seeing the light of day? Have I been asleep this past 8-months?

what about some CRIMINAL charges, eh? Oh wait, no tax money for luxury jails with wifi and golf courses; networking opportunities.

badger wrote:

oil has been signaling this.

Oil volumes are down 8% from a year ago. The price is up enough to offset that. I don't know where the oil is going but it's not U.S. demand pushing up prices.

1 currency now -yogi wrote:

This trade deficit is serious.

??

oh on tax benefits again...check :pigged" thread for more news on that and how BK banks like WaMu will get big bucks.

KB Home Reports First Quarterly Profit Since 2007 on Tax Boost - Bloomberg.com

By Daniel Taub

Jan. 12 (Bloomberg) -- KB Home, the Los Angeles-based homebuilder that sells to first-time buyers, reported its first quarterly profit since 2007 after booking an income tax benefit.

Net income was $100.7 million, or $1.31 a share, compared with a loss of $307.3 million, or $3.96, a year earlier, KB Home said in a statement today. The average estimate of eight analysts in a Bloomberg survey was for a loss of 64 cents a share. Revenue fell to $674.6 million from $919 million a year earlier.

KB Home, which last posted a profit in the first quarter of 2007, is fighting competitors with its Open Series homes, which are smaller, less expensive and bring higher profit margins than the company’s older designs. The shares surged 17 percent last week after Lennar Corp., the third-largest U.S. homebuilder by revenue, also reported an unexpected quarterly profit on the change in tax law.

......

YLSP wrote:

and volley the ball directly into the hands of Dansby?"

That was not a result of a deliberate anything, I don't think! It was an instinctive effort to keep it away from prying hands, effort that went awry?

What I never understood about the AIG mess is why didn't the unit which caused the mess get isolated? And why in the name of gawd are the irresponsible still getting big paychecks to unwind and sift through the mess? The whole deal is a huge mystery to me from the very beginning; although I understand the global nature of their business and why something had to be done, I just question what was done and who got rewarded for bad behavior.

Be yourself. Follow your instincts. Success depends, at least in part, on the ability to "carry it off." -- Rummy

YLSP wrote:

For the love of all that is good, the NFL officials suck and tons of games are won and lost based on their calls or lack of calls.

Yep, as has been said, you could flag every play for an illegal move just based on the linemen. I've always felt the rule enforcement was designed to keep the players from killing themselves and coaches from gaming the rules.

Bankergate: Emails Expose Criminal Financial Dictatorship At Work

Nanoo-Nanoo wrote:

why didn't the unit which caused the mess get isolated?

Cross-guarantees - the Financial Products unit didn't actually have enough capital to back the CDS they sold. They relied on the insurance units guaranteeing payment for the CDS. Note the insurance units were regulated by state insurance regulators but Financial Products was regulated by Office of Thrift Supervision (which is the same as having no regulator.) I'm sure that if the state regulators had known the scope of liabilities that the insurance units were backing, they would have objected.

There will be some heavy lifting involved - but the market will be green by 2:20 pm or so.

I've always felt the rule enforcement was designed to keep the players from killing themselves and coaches from gaming the rules

..........organized war with a ball - kinda like b-ball as well........btw - why isn't that scum-bag Jayson Williams behind bars yet? Seven years after shooting the limo driver he hired, tries to implicate his "buds" by perjured testimony, gets arrested for another DUI and accident, and is still walking the streets? More total bullshit!

When a NFL player has their helmet poised half-on, half-off, on the sidelines, for some reason, they look like they are wearing ancient Greek helmets, to me.

http://www.paybest.com/jpg3/greek_helmet.jpg

justaskin wrote:

?where.........paid for by the taxpayer?????when

HAMP = $75 Billion; if they can make a few modifications permanent.

whitehairdevil wrote:

The November number marked the 28th month in a row to show a decrease from the same month a year earlier. But the trend was broken in December, which was estimated at 1.08 million TEU, down slightly from November as the holiday season came to a close but a 1.7% increase over December 2008.

So we are finally into the territory where the year over year comparisons to the depths of the cliffdive are positive...now we see if there is a trend or not. Also, what will the magnitude of th negative impact be of the rate of growth for imports exceeding exports be on the GDP number?

Rajesh wrote:

Oil volumes are down 8% from a year ago. The price is up enough to offset that. I don't know where the oil is going but it's not U.S. demand pushing up prices.

Word.

SECOND on WORD.

The Green Bay Arizona game was great entertainment. The Packers will be back next year (barring a lock out) and if Rogers stays healthy he will be the number one fantasy quarterback for next year! Unlike Minnesota that sold their sole for a quarterback who has only one one super bowl.

Go Saints!!!

Rajesh wrote:

HAMP = $75 Billion; if they can make a few modifications permanent.

What % of that will go to the "struggling homeowners"......

Yes, and to the hallmarks of please note that one of the Sam's Clubs to be closed is in Houston, TX...

I want to put together a new NFL franchise consisting of only dreadlocked players, on the Niagara frontier...

YouTube - Bob Marley - Buffalo soldier

ECON...what the heck is going on with natural gas?

Why does every last collegiate football player show some naked leg, but not one NFL player is allowed to?

My better half refuses to wake up, so I might be here awhile...

LoserBeachBum wrote:

I do not just understand American football...

If that's all you see, then you definitely don't understand it. It's the most cerebral of all of the major sports. No snark-

Nanoo-Nanoo wrote:

..what the heck is going on with natural gas?

I ate too much cheese last night-

Cinco<

Is it possible to eat too much cheese?
I think NOT!

Well, who would replace him? SUMMERS...the biggest idiot of the lot? Nope how about ex Goldman CEO Corzine now that he's out as gov of NJ...OH we have such a wonderful field of sober adults to choose from.

COME ON,

End the Fed.

SNAFU wrote:

At this moment BB's confirmation is not a done deal, I do not think!

Last I read, Sanders put a hold on BB's nomination. Maybe we need to add a poll--Who is the biggest villain?
1--Greenspan
2--BB
3--Geithner
4--Paulson
5--'Goldman/Sachs
6--all the above
7--other

energyecon wrote:

Plus, the natural gas futures markets are much thinner than the oil markets...

shhhh, don't tell that, T.Boone would object

Thanks for the reply, I just watch, its been STRANGE. .

Mel wrote:

1--Greenspan
2--BB
3--Geithner
4--Paulson
5--'Goldman/Sachs
6--all the above
7--other

You left out the little big fella who made ~200m$ after he left govt and more importantly, groomed the rest.

I love this story.

Life Insurers Positioned to Sidestep CMBS Losses, Barclays Says - Bloomberg.com

Jan. 12 (Bloomberg) -- U.S. life insurers, a group led by MetLife Inc. and Prudential Financial Inc., will sidestep losses on investments tied to commercial mortgages, said Eric Berg, an analyst with Barclays Plc.

“Life insurers stand to lose little, if anything” even if commercial property values continue to fall, Berg said today in a research report. “The reason: the substantial subordination, or protection against loss, that the insurers enjoy” on the commercial mortgage-backed securities, he said.

Life insurers use policyholder premiums to buy mortgage- backed securities and lend to property owners. Prudential, the second-biggest U.S. life insurer, predicted in December that commercial real estate prices will begin to increase this year.

......

RATM wrote:

SEC Orders AIG Info Sealed Until November... 2018!

Am I surprised....No. Who heads the SEC.......Mary Schapiro. Who is Mary Schapiro?

She worked as an attorney within the futures industry and helped to write new Government policy and regulations on the derivatives market following the stock market crash on 1987 ( and how did that go/snark).

She has already held senior positions at the SEC. She served as Commissioner for six years: she was appointed by President Reagan in 1988, re-appointed by the first President Bush in 1989, and named Acting Chairman of the watchdog by President Clinton in 1993........

These events and the people chosen to "oversee" key government positions are not accidents or moments in time, they are methodical and deliberate. She went over to the dark side a long time ago and serves her masters well. We live in a feudal system.

why are links to shedlocks site not showing up on the main page?

HomeGnome wrote:

Record 6.35 unemployed people per job opening

TAKE THE MARKET ON THAT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1111!!

HomeGnome wrote:

Is it possible to eat too much cheese?
I think NOT!

If you're lactose intolerant, then there definitely IS-

Mel wrote:

Who is the biggest villain?
1--Greenspan
2--BB
3--Geithner
4--Paulson
5--'Goldman/Sachs
6--all the above
7--other

7- other; Milton Friedman. Friedman opposed government regulation of many types. Edit.....He emphasized the advantages of free market economics and the disadvantages of government intervention and regulation. How's this worked out for the peons since Reagan's tenure? Is there anyway to dig him up and tie his rotting corpse onto Greenspan?

rps wrote:

U.S. conscription

??

rps wrote:

Milton Friedman. Friedman opposed government regulation of many types. He once stated that his role in eliminating U.S. conscription was his proudest accomplishment. Is there anyway to dig him up and tie his rotting corpse onto Greenspan?

The theorist is not the villain--it's the people that found a theory correct because it fit there purposes.

fixed it.....

Mel wrote:

it's the people that found a theory correct because it fit there purposes.

It's the "wealth foundations" that supported and groomed a sap to espouse a theory that benefitted the few at the expense of the many. Welcome to the Chicago School of Economics supported by the top elite foundations.

rps wrote:

Friedman opposed government regulation of many types. Edit.....He emphasized the advantages of free market economics and the disadvantages of government intervention and regulation. How's this worked out for the peons since Reagan's tenure? Is there anyway to dig him up and tie his rotting corpse onto Greenspan?

Misrepresentation. Friedman called for direct payment to private individuals via negative income tax, and is not mistaken to have found fault with government expedited welfare programs. An approach more diametrically opposed to the trickle-down ethos of the Reagan years is hard to imagine.

Same as demonizing Keynes. Pick on someone alive . . . and that you know something about.

See The Curse of the Withholding Tax; MIses Institute:

To pay for the war, the Revenue Act of 1942 lowered exemptions and raised income tax rates. But it also did something even more insidious—it instituted a 5 percent "Victory Tax" on all wages above an exemption of $624. The tax was to be collected by the employer and deducted from the employee's paycheck—just like the Social Security tax that began in 1935. The Current Tax Payment Act of 1943 then revolutionized the income tax by making withholding taxes universal. The withholding tax was part of the new tax plan offered by Beardsley Ruml (1894–1960), the chairman of the New York Federal Reserve Bank and treasurer of R.H. Macy and Co. By 1945, about three-fourths of Americans were paying federal income
taxes. And although the withholding tax was sold as a wartime emergency, like most expansions of government instituted during wartime, it has been a way of life for most Americans ever since......
Surprisingly, it was a free market economist who helped the federal government implement the withholding tax in the first place. As was pointed out by the Austrian economist, Murray Rothbard (1926–1995), in his 1971 article "Milton Friedman unraveled":