Monday, June 17, 2013

An Orwellian Orgasm

For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realise that the privileged minority had no function, and they would sweep it away. In the long run, a hierarchical society was only possible on a basis of poverty and ignorance.  -  George Orwell, "1984"
The ability to perceive and understand the truth about Government/Federal Reserve/Industry economic reports is getting more difficult for those who only look at the headlines or take a cursory glance at the story, without delving into the details.  I'm sure eventually, if Orwell's vision plays out accurately even further than it has already, the details behind the headlines will be conveniently obfuscated -  “Yes, sometimes two plus two is four. But sometimes it’s five or even three. Sometimes it’s all of those at the same time.”  (from "1984"). 

So today the NY Fed released its monthly Empire State Manufacturing report, which showed that the general index increased from April's decline.  But the new orders index was -6.7, shipments index was -11.8%, unfilled orders -14.5%, labor index -10. I believe the source of the increase was derived from prices paid, +21, and prices received, +11.3.   There was an increase in the "outlook," a touch-feely sentiment poll, but the 6-month future outlook was negative.

In fact, beneath the headline number the report was down-right ugly.  You can check my ability to read and copy numbers here:  Empire State Manufacturing Survey.

The other Orwellian Orgasmic business report released today was the National Association of Homebuilders "Confidence" Index sponsored by Wells Fargo, the biggest home mortgage lender.  With Wells Fargo as the promoter of the index,  you can see how this thing gets spun around on its head with Orwellian deception.  In fact, here's how the survey is based:  "the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months"  LINK  As you can see, the questions asked are analogous to polling a classroom of kindergartners if they think they'll still like to eat candy at the end of the summer.

The truth is, that based on all the data I've been collecting and analyzing over the last 4 months, it would appear as if the housing market is getting ready to fall off of a cliff.  Here's just a flavor of the information which I will be turning into a couple of articles - this is from Mark Hanson, a private consultant who has been the most accurate housing market analyst I've observed over the past 12 years:
This morning [June 5, 2013] I was made aware that three large private mortgage bankers I follow closely for trends in mortgage finance ALL had mass layoffs last Friday and yesterday to the tune of 25% to 50% of their operations staff (intake, processing, underwriting, document drawing, funding, post-closing). This obviously means that my reports of refi apps being down 65% to 90% in the past 3 weeks are far more accurate than the lagging MBA index, which is likely on its' way to print multi-year lows in the next month.
The point here is that the entities putting up the money to finance homes are aggressively reducing their operations - i.e. that's how the big money is betting.   The new homebuilders index is reflecting sentiment.  One is hard cash, one is hot air that belies the underlying facts.

Someone asked me a little earlier if I had any thoughts on what Bernanke might say on Wednesday after the FOMC meeting breaks.  My reply was "no thoughts, barely interested."  I went on to say that "I'd be interested if they talked about why the Government has already incurred a $626 billion spending deficit 8 months into its fiscal year (end of May) when the CBO released a report three weeks earlier on May 8th that projected a full FY deficit of $649 billion...


  1. No shit. Not interested in anything Bernanke has to say unless of course, he quits earlier than expected. That would be some much needed good news.

  2. don't you remember the efficiency and liquidity argument they pushed for this?

    High-frequency trading tactic lowers investor profits

    High-frequency trading strategies that exploit today's fragmented equity markets reduce investor profits overall, according to new findings by University of Michigan engineering researchers. The study is believed to be the first to examine how a common and lucrative trading practice known as latency arbitrage can exploit both market rules and the recent growth in the number of venues where stocks can change hands. The researchers will present the findings June 20 at the ACM Conference on Electronic Commerce in Philadelphia.

    Latency arbitrage is a $21-billion-a-year tactic made possible by fragmentation—the shift from physical trading floors such as the New York Stock Exchange decades ago to dozens of competing electronic markets today. The strategy takes advantage of the time it takes for trade price information from the various markets to reach a central repository that publishes a public quote, known as the National Best Bid and Offer.

    Established in 2005, this public ticker is one of several federal efforts aimed at reining in the effects of fragmentation. The Securities and Exchange Commission also mandates that the markets communicate and route orders to the place with the best price. But these efforts aren't working as well as they could be, says Michael Wellman, U-M professor of computer science and engineering who led the study.

    "The public ticker is always a little bit out of date," Wellman said. "The delay is inherent. It takes time to compute and to disseminate the information. You can reduce the delay, but you can't get it down to zero."

  3. Michael JacksonMonday, 17 June, 2013

    June 16, 2013

    "...we have already laid out the world economy’s grim picture. Since then the situation has got worse. The Chinese economy confirms its slowdown as well as Australia, emerging countries’ currencies are disconnecting, bond interest rates are rising, UK salaries are continuing to fall, riots are affecting Turkey and even peaceful Sweden, the Eurozone is still in recession, the news filtering out of the United States is no longer cheerful…

    Nervousness is now clearly palpable on all financial markets where the question is no longer knowing when the next record will be but succeeding in getting out soon enough before the stampede. The Nikkei has fallen more than 20% in three weeks during which there have been three sessions with losses exceeding 5%. So, the contagion has now reached the “standard” indices such as the stock exchanges, interest rates, and currency exchange rates… the last bastions still controlled by the central banks and, therefore, totally distorted..."

    The currently developing second crisis could have been avoided if the world had taken note that the United States, structurally incapable of reforming itself, was unable to implement other methods than those which had led to the 2008 crisis. Like the irresponsible “too big to fail” banks, the “systemically” irresponsible countries should have been placed under supervision from 2009...Unfortunately the institutions of global governance have proved to be completely ineffective and powerless in managing the crisis. Only regional good sense has been able to put it in place; the international arena producing nothing, everyone began to settle their problems in their part of the world.

    In 40 years of US trade imbalances and the volatility of its currency, the dollar as the pillar of the international monetary system has been the carrier of all the United States’ colds to the rest of the world, and this destabilising pillar is now at the heart of the global problem because the United States is no longer suffering from a cold but bubonic plague."

    [I don't agree with everything they say but they do make for interesting reading. They think there is still a chance for reform from the international community (Globalism) but I think the ship is taking in too much water to survive the next sinking. I also wonder if the numbers from all the Globalization Nations total would give us even more insight of the day of reckoning as the US isn't a self-sustaining, productive Nation like it was in the 1930's. She has become a bit of a harlot to other nations and need their attention and affection.....errr, I mean, in defence of National Security.]

  4. In addition please remember that the Chinese and Russians are none to pleased. Not only with all the spying that has been going on but,the actions in Syria also. The U.S. has lost all credibility. Our Dollars devalue by the day,Fed now buying 70% of all debt. As soon as the Dollar can be bypassed in trade exchange the real nightmare begins. Wait, it already has!

  5. For the First Time Majority Finds President Untrustworthy: Obama Approval Plunges Among Young Americans -Zero Hedge
    The Obama family will be going to Africa for vacation all on the U.S. taxpayer's dime.

    Then there's Obamacare headed straight for us. So incredibly a giant tax directed at every American except certain choice politicians.

    Something has to be done about this oligarchy...sooner rather then later !!!

  6. Michael JacksonMonday, 17 June, 2013

    "What do 1929, 2000 and 2007 all have in common? Those were all years in which we saw a dramatic spike in margin debt. In all three instances, investors became highly leveraged in order to "take advantage" of a soaring stock market. But of course we all know what happened each time. The spike in margin debt was rapidly followed by a horrifying stock market crash. Well guess what? It is happening again. In April (the last month we have a number for), margin debt rose to an all-time high of more than 384 billion dollars. The previous high was 381 billion dollars which occurred back in July 2007. Margin debt is about 29 percent higher than it was a year ago, and the S&P 500 has risen by more than 20 percent since last fall. The stock market just continues to rise even though the underlying economic fundamentals continue to get worse. So should we be alarmed? Is the stock market bubble going to burst at some point? Well, if history is any indication we are in big trouble. In the past, whenever margin debt has gone over 2.25% of GDP the stock market has crashed. That certainly does not mean that the market is going to crash this week, but it is a major red flag."

  7. "The reason I think “this time is different” (the most dangerous four words associated with economic prognostication) is because of the recent and expected behavior of “thin-air” credit. As you recall, thin-air credit is credit created by the Federal Reserve and/or the depository institution system (commercial banks, S&Ls and credit unions). This credit is unique inasmuch as it is created figuratively out of thin air. Credit created figuratively out of thin air enables the borrower to increase his/her current spending but does not require the lender or any other entity to cut back on its current spending. Hence, a net increase in thin-air credit, in all likelihood, will result in a net increase in nominal spending in the economy on goods, services and assets, both physical and financial."

    Creating credit out of nowhere is good?? It's just ghost assets! Yep, this country is NUTZ!!!

  8. To whom it may concern ( that's all of you U.S. taxpayers btw ) :

  9. ICIJ releases offshore leaks database revealing names behind secret companies, trusts
    Users can search ICIJ information about more than 100,000 offshore entities and discover the networks around them

    When Bernard Madoff built his $65 billion house of cards; when food distributors passed off horsemeat as beef lasagna in Europe; and when Apple, Google and other American companies set up structures to channel their profits through Ireland — they all used tax havens.

    They bought secrecy, minimal or zero taxes and legal insulation, the distinctive products that tax havens market and that allow companies to operate in a fiscal and regulatory vacuum. Using the offshore economy is akin to acquiring your own island where the rules that most citizens follow don’t apply.

    The International Consortium of Investigative Journalists publishes today a database that, for the first time in history, will help begin to strip away this secrecy across 10 offshore jurisdictions.

    The Offshore Leaks Database allows users to search through more than 100,000 secret companies, trusts and funds created in offshore locales such as the British Virgin Islands, Cayman Islands, Cook Islands and Singapore. The Offshore Leaks web app, developed by La Nación newspaper in Costa Rica for ICIJ, displays graphic visualizations of offshore entities and the networks around them, including, when possible, the company’s true owners.
    Attacking Apathy

    The data are part of a cache of 2.5 million leaked offshore files ICIJ analyzed with 112 journalists in 58 countries. Since April, stories based on the data — the largest stockpile of inside information about the offshore system ever obtained by a media organization — have been published by more than 40 media organizations worldwide, including The Guardian in the U.K., Le Monde in France, Süddeutsche Zeitung and Norddeutscher Rundfunk in Germany, The Washington Post and the Canadian Broadcasting Corporation (CBC).

    ICIJ’s investigation — called Offshore Leaks by the Twittersphere and the public —has shaken the political and economic establishments from South Korea to Canada, sparking investigations, resignations and a renewed sense of urgency among world leaders that this is the time to rein in offshore abuses .
    EU Commissioner Algirdas Semeta said the ICIJ’s investigation has transformed tax politics and amplified political will to tackle the problem of tax evasion – knocking down what the EUobserver called “a wall of apathy” in Europe that had thwarted previous attempts to attack offshore secrecy.

    “I personally think Offshore Leaks could be identified as the most significant trigger behind these developments ... It has created visibility of the issue and it has triggered political recognition of the amplitude of the problem,” he told EU Observer.

  10. NYU Administrators Create Student Debt Slaves to Subsidize Summer Homes, Ginormous Pensions

    When union members demand decent pay levels and work conditions, they are charged with featherbedding and overmanning or the new neoliberal catchall, “demanding uncompetitive wages”. But when the upper crust loots institutions, the mainstream media is typically missing in action.
    The latest find is from Pam Martens, who has been keeping tabs on the administrator-enriching real estate racket at NYU. She ferreted out an egregious housing deal for Jack Lew when he was at NYU

    1. Michael JacksonTuesday, 18 June, 2013

      I used to work at the University System in Nevada. In the early 2000's, they had forms for students to get their first credit card up to $30,000(I'm going off of memory but it was a high amount). Many students, never taught how to manage money - let alone their lives - went deeply in debt - on top of the debt from college. I had student workers as well as privately questioned students on campus in 2009 about their debt and college prospects and you could see what a dangerous bubble it is. After the crash, it's been inflated on a grander scale and many corporations - only willing to hired a college graduate - are adding more fire to the ballon. The student loan percent is now double starting July 1st but all this money is going to the top for salaries. It's unsustainable and will pop. But academic-land will keep pushing its "you need us!" mantra for fresh blood till the system collapse.

      Now you have shown that NYU has been in a real estate racket and that makes sense. The Nevada System has been working on selling its land in Reno and desire to buy land in Las Vegas cause the belief is, once the state (if ever) gets back on its feet, recovery will start there, where everyplace else, it will drag on (however, the University wants to put out its own "bonds" that taxpayers will pay for for the University to buy land).

      This went so far as calling Reno a "College Town" in 2010. I have lived here for 35 years and Reno has NEVER been a "College Town" neither will it ever be.

      Student Debt Slaves or Soliders off to War. One way or another, we're killing our younger generation.

  11. Obama's Soft Totalitarianism: Europe Must Protect Itself from America

    Is Barack Obama a friend? Revelations about his government's vast spying program call that assumption into doubt. The European Union must protect the Continent from America's reach for omnipotence.

    But is he a friend? The revelations brought to us by IT expert Edward Snowden have made certain what paranoid computer geeks and left-wing conspiracy theorists have long claimed: that we are being watched. All the time and everywhere. And it is the Americans who are doing the watching.

    On Tuesday, the head of the largest and most all-encompassing surveillance system ever invented is coming for a visit. If Barack Obama is our friend, then we really don't need to be terribly worried about our enemies.

    It is embarrassing: Barack Obama will be arriving in Berlin for only the second time, but his visit is coming just as we are learning that the US president is a snoop on a colossal scale. German Chancellor Angela Merkel has said that she will speak to the president about the surveillance program run by the National Security Agency, and the Berlin Interior Ministry has sent a set of 16 questions to the US Embassy.

    A Monitored Human Being Is Not a Free One

    What, exactly, is the purpose of the National Security Agency? Security, as its name might suggest? No matter in what system or to what purpose: A monitored human being is not a free human being. And every state that systematically contravenes human rights, even in the alleged service of security, is acting criminally.