NO sir, no need to take a euphoria pill this morning; we can skips the tranks and all give thanks that Washington’s pranks will soothe the ranks. But: Then what?
Too obtuse (or early)? OK, how about a quick visit to the White House speech department for a copy of the State of the Union? Plenty of look-aheads ands calls to action, alright:
By 2035, 80 percent of America’s electricity will come from clean energy sources.
—
Within 25 years, our goal is to give 80 percent of Americans access to high-speed rail. (Applause.) This could allow you to go places in half the time it takes to travel by car.
—
So tonight, I’m asking Democrats and Republicans to simplify the system. Get rid of the loopholes. Level the playing field. And use the savings to lower the corporate tax rate for the first time in 25 years –- without adding to our deficit. It can be done.
—
Recently, we signed agreements with India and China that will support more than 250,000 jobs here in the United States. And last month, we finalized a trade agreement with South Korea that will support at least 70,000 American jobs.
But, to me, where things slipped from happy-talk to me reaching for the ViseGrips (to pinch myself out of my terrible alternate reality I seem to be stuck in) was this…
“But now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same….”
Huh? Well, er, uh… ‘scuse me Mr. President, but what about the Fed printing up $75-billion a month in QE-2 scrip with the prospect of more to come? What about banks anxious to shred potential evidence of mortgage fraud? What about the housing reports that say we’re going to have more foreclosures in 2011 than 2010? How does that all fit it with this rosy outlook? (I must be dense, I figured, as I adjusted the ViseGrips to get an extra big pinch this time.)
But wait; it’s really worse. Let me also lay the next little $100-billion (or more) nightmare on you. I’ve mentioned to you (a couple of times) that I’m co-authoring a book with my friend and involuntarily retired structured finance whiz Howard Hill. Howard and I have been arguing about ‘next turns’ in the economy since about 1996, or so. (Howard’s usually right.)
The reason I bring up Howard is that with a keen understanding of the ‘back-end’ of deals, when Howard calls me up and say “OK, NOW you can worry...” I take it to heart.
While most of Washington is so chipper this morning, this is why George is down… I mean besides/on top of Clif’s latest predictive linguistics run released yesterday which has enough dreary stuff in it to depress even the more wildly tranked MSM optimist?
Remember: Howard predicted – quite correctly – that the robo-signing mess in the mortgage business would blow over. True to his prediction, it has, more or less.
But there’s a huge story brewing that most aren’t seeing the significance of – yet. Although Bloomberg ‘gets it’ with their report “JPMorgan Refused Mortgage Repurchases it also Sought, Ambac Says“.
After you read that article, flip over to Howard’s analysis here.
After digesting Howard’s article, you’ll also get further along the drift of this in the Atlantic article out Tuesday revealing “E-mails suggest Bear Stearns Cheated Clients Out Of Billions“.
Hate to question the paradigm floating round the District of Cheerfulness, but while the sloppy book-keeping/rob-signing has disintegrated to something of a non-issue, claims out out and out fraud are still swirling and building and here come more foreclosures.
And at some point, someone besides a certain East Texas outback nutjob is going to figure out that the only way out of this next financial debacle will be scads more paper and ink: Thinking QE-3 and QE-4 here plus a couple of pallets of stimulus.
China won’t have to fire a shot to get their Yuan to become the world’s reserve currency. We’re taking aim at wrong problems all over the place and getting our foot every time.
Oh, and the part about “Faster than flying, without the pat-down” seems further evidence to me of DC’s “out of touchness”. Reason? Train police (trained? lol) have been making surprise searches at rail depots, too. Suppose that little news flash got left off the daily briefing…
Rally Ho!
Still, those problems are off on the horizon and today’s task is finding greater fools. Shouldn’t be hard to find them, today. Futures are down. I expect the market may yet pass through the 12,100 Dow level, and thus complete a major cyclical advance. Ore it could be over already.
Laughably, while Wall Street parties onward and upward (into the stuporsphere?) we notice that talk in Washington about allowing states to declare bankruptcy is moving ahead. Oh yeah, just makes me want to run out first thing this morning and sell my gold coin and my silver one to buy me some of that action. Want a toke off this here crack pipe, while we at it?
Fed Yawner
Drop by this afternoon about 1:30 for the Fed (non) decision. There’s just about zip/bupkis/ and nada gonna happen, but the financial press will no doubt seize the opportunity in some cheerleading lingo, almost certain to be included in FedSpeak terms, to give one more push to the upside.
I’ll be the guy eyeing put options for 90-trading days out.
UNLESS: You know HU said to Obama “Ya’ll raise rates, or we’re gonna require payment in real money for this stuff your country is buying…”
Urban Renewal Money
I noticed that the US Marine Corps has spent $170-million for a MOUA (military operations in Urban Areas, see FM3-0 and FM3-06 …)
I’m all in favor of well trained Marines (semper fi) but don’t we already have two such training places set up? (Like Iraq and Afghanistan?)
So couldn’t that money have been spent somewhere like, oh, Detroit?
Burning Desire
If you’re counting the number of self-immolations going on in the GlobalRev it’s up to 13 now in Tunisia, Algeria, Egypt, and Saudi Arabia.
Trouble for Lebanon
Gotta wonder what kind of grassroots Hezbollah government will come from that group picking a billionaire businessman to lead it.
But, since Everything’s a Business Model, why not?
Net Metering?
While we await the checkbook festival in Washington, sure to come as big companies weasel to charge more for fast internet services, there’s a story up in Canada worth noticing where “Consumer backlash over usage-based Internet billing goes viral.”
The more you surf, the more you pay isn’t gonna cut it with consumers. Ones with memories and who vote, in particular.
Crop Circles Going Global
Not everything is grim. For reasons unclear to us, our Indonesia Bureau Chief has sent us this:
“The big news down here is Indonesia’s very first crop circle. It formed Saturday night and was first reported early Sunday morning. One of the first witnesses said that the dew on the rice was undisturbed, indicating to him that no one had walked in or out of the paddy. The air force immediately scrambled a helicopter to photograph the whole thing. The local atomic commission has certified it as non-radioactive. The toxic waste commission has certified it as clean. There are literally hundreds, and maybe thousands by now, of people coming to see the thing.
Among other interesting things, it’s in Yogyakarta within sight of Mt. Merapi, of recent eruption fame. It also occurred almost simultaneously with a strange phenomenon in northern Sumatra. Seems high tide in one area is getting out of hand. In the mornings, two towns and surrounding areas are taking in as much as 40cm/16in of water. The old timers recall it happening before, a very long time ago. It started Saturday morning about 12 hours before the circle appeared.
Other than all that, the fishermen are still high and dry. Rough seas have kept them out of the water for nearly a month, and a little talked-about story appears daily as they begin selling what little they own to survive. I haven’t noticed much difference in fish prices here in Jakarta, but I’ll bet that changes if this keeps up.
In other food news, a fruit called ‘rambutan’ has virtually disappeared from store shelves, while rice prices remain high and price controls are being debated. Chilies have come down a little, but not much, while milk is set to go up soon if controls are relaxed on that item. The government is shuffling ex/im duties to try and find a balance to keep prices from getting out of hand. Hungry people get militant.
As for Tunisia and other Soros revolutions, not much popping up on the local radar. Some people are paying attention, but most couldn’t be bothered. If Egypt pops, that may have a deeper effect on local political discussions.
And on that front, we note that the opposition parties in Egypt are about to take it to the streets again, and looks like we can pretty much kiss off stability for a year, or longer, to come.
Ah, but there’s money in chaos, right? Food prices go up, arms sales go up, and somewhere there’s gotta be a billionaire (or several) profiting from social disaster.
Big Recall
Press release out of Toyota this morning:
Toyota Motor Sales (TMS), U.S.A., Inc., today announced that it will conduct a voluntary Safety Recall involving approximately 245,000 2006 through 2007 Lexus GS 300/350, 2006 through early 2009 Lexus IS 250, and 2006 through early 2008 Lexus IS 350 vehicles sold in the U.S. to inspect the fuel pressure sensor installation.
Doggone it, Elaine’s old ’06 350′s going to the shop…
Meteor
Eyewitness report:
“George,
I saw a large meteorite tonight on my way home to Red Lodge, MT, from Billings. It appeared to be traveling to the south or southwest. It was visible about 3 seconds and had a green hue, about 10:27 pm Mountain Time. Did anyone else see it?”
I Sh_t You Not Dept.
A lot of times, newbies to UrbanSurvival write and decry this website as a ‘fear mongering‘ gathering place of ‘very paranoid people‘. Constantly talking about longwave economics and macroeconomics of jobjacking and such, it sounds a little repetitious at times, I’ll agree.
But it’s not wrong.
Probably the biggest economic story out Tuesday was not the State of the Union, although that’s what the MainStreamMedia has to sell, so that’s what the American public got sold.
But the bigger one was carried in the UK Telegraph which headlined that the “Bank of England chief Mervyn King: standard of living to plunge as fastest rate since 1920′s” and further, this was caused by the report that the UK was going through economic contraction again. Sound like the ‘double dip’ that we talked about when the Case-Shiller/S&P Housing index dropped again on Tuesday?
If that’s not current enough for you, just this morning the Mortgage Bankers Association released their weekly report. Notice the highlighted part:
“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 21, 2011. The Market Composite Index, a measure of mortgage loan application volume, decreased 12.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 12.0 percent compared with the previous week. The results do not include an adjustment for the Martin Luther King holiday. The Refinance Index decreased 15.3 percent from the previous week and reached its lowest level since January 2010. The seasonally adjusted Purchase Index decreased 8.7 percent from one week earlier. The Purchase Index is at its lowest level since October 2010. The unadjusted Purchase Index decreased 3.1 percent compared with the previous week and was 20.8 percent lower than the same week one year ago.
The four week moving average for the seasonally adjusted Market Index is down 1.0 percent. The four week moving average is down 3.7 percent for the seasonally adjusted Purchase Index, while this average is down 0.1 percent for the Refinance Index.
The refinance share of mortgage activity decreased to 70.3 percent of total applications from 73.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.2 percent from 5.0 percent of total applications from the previous week.
And so we have the housing industry rolling over into a second depression, so we are seeing what’s becoming standard economic fare that may take till about mid April before markets really plunge, by my latest back-of-the-envelope calcs.
Working on an interesting notion for Peoplenomics subscribers this weekend, by the way: Making a cross-asset-class data set which will likely reveal, if my hunch is right – how the economy sets up for a double dip.
Which it is.
There was a report just released at 7 this morning which screams to the aware thinker types (both of us) that people who are older and have been unemployed for a long time are finally throwing in the towel. Check this out:
As the economy gradually recovers, some mature workers are feeling more comfortable about retiring now compared to last year at this time. According to a new survey from CareerBuilder, 65 percent of workers age 60 plus said they are putting off retirement because they can’t afford to retire financially; down from 72 percent who said the same last year. The nationwide survey was conducted among more than 500 U.S. workers age 60 and up between November 15 and December 2, 2010.
More than one-in-four (28 percent) mature workers age 60 plus plan to retire within the next two years, while 27 percent are planning to retire in three to four years, and 18 percent in the next five to six years. Sixteen percent estimate it will be seven years or more before they can stop working, while one-in-ten workers (10 percent) don’t think they’ll ever be able to retire.
The primary drivers for postponing retirement are financial restraints, as indicated by 65 percent of respondents, and the need for health insurance and other benefits, as indicated by 58 percent of respondents. However, mature workers are staying on board at their companies for a variety of other reasons, including:
- Enjoy their job (39 percent)
- Enjoy where they work (36 percent)
- Fear retirement may just be boring (26 percent)
- Enjoy feeling needed (14 percent)
“It’s encouraging to see that more workers have the option to retire if they want to, but there are still some who want to keep working at their companies for a variety of reasons,” said Rosemary Haefner, vice president of human resources at CareerBuilder. “Twenty-two percent of workers age 60 and up that we surveyed said they have asked their employer to stay longer with the company, while 29 percent of companies said they are open to keeping workers on board a little longer.”
While there’s some silver lining to people (finally) getting around to retiring, in that they will create some job openings for younger generations to move up (and into), there’s a downside as well. When you look at the numbers you can almost get a sense that lots of older workers are tossing in the towel because its becoming clear that working longer may not result in a higher payoff in terms of a better standard of living in those supposedly ‘golden years’.
To be sure, Obamacare (or what survives of it) may provide some decent healthcare but the dream of a $200K diesel pusher RV is slipping out the back door as costs go up and what was once a ‘buy a piece of property and put a little motor home on it’ strategy is being blown up systematically by zoning laws which are continuing to hem in lower cost housing options.
How can I account for such a wide gap between the underlying economic realities that slap me about daily when I talk to guys like Clif, Robin Landry and Howard Hill (and others unmentioned in various places & positions)?
Easy. America has farmed a good deal of its thinking out to news media, which in turn are driven by polling and base a lot of news coverage decisions on questions that are either wrongly worded, to elicit a particular kind of response, or the poll structures are lame.
Particularly, Stinky Journalism is out this morning with the Top Ten ‘Dubious Polling’ Award. From their press release:
“These 2011 awards highlight the top ten most Dubious Polls of 2010 which could reasonably be called the Year of Polling Dangerously. Or, more to the point, the Year of Polling Ridiculously.
By either name, the media ethics project, sponsored by the Art Science Research Laboratory in New York—and its resident expert on polling, David W. Moore—has released the Third Annual Top Ten “Dubious Polling” Awards.
The ten results are not pretty. But they are pretty funny. (Better to laugh than cry at the polling inaccuracies).
Take, for example, the 10th-place finisher, Pew Research’s Social and Demographic Trends Project, which received the “Sour On Romance” Award.
Pew would have us think that marriage is so over in America because their polling found that the numbers of American adults saying “marriage is obsolete” has increased by 11 percentage points since 1978.
“Holy Cupid,” says author, pollster and political scientist Moore, “I don’t think so!”
In fact, Moore discovered, by studying the methodology of the poll and the data collected, that the increase—based on Pew’s own data—was only 8 percent, and that that increase could be entirely due to questionnaire design.
Our 6th-place finisher, Rasmussen and its subsidiary, Pulse Opinion Research, got so many election result predictions wrong in 2010 that they earned the “Try Harder Next Time” Award.
Indeed, Rasmussen’s polling research subsidiary got one election prediction wrong by 40 percentage points, a virtually unheard of measure of failure.
Heartwarming, ain’t it?
So if you get the impression that Mr. Ure’s daily view of the world is skewed a bit, I sh-t you not, it is: Toward reality and aimed specifically at what’s ahead of us, not what’s behind us and gone to the unchanging past.
Oh, my those ‘seeds of despair‘ some complain about? Merely seeds of hope laying fallow. They quickly germinate when warmed by thought, fertilized with initiative and watered with just a bit of money.
So if you and I know that, why don’t more people ‘get it’?
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