Many have proclaimed that the end of the recession happened sometime this past summer.

If that in fact happened, we are one or two quarters into recovery. Yet, a number of factors have not lined up with the post World War II history of recessions. Among these are the behavior of non-financial stocks’ profits and revenues. David Rosenberg, Chief economist at Gluskin Sheff (Canada), has provided some of the data that clarifies just what is different in this economy.

Read it in the Huffington Post (here). Elizabeth Warren details some of the data that documents the economic disaster that is rotting the economic foundation of the U.S that was built in the last century. The has been discussed by other authors, including some here on Seeking Alpha (see James Quinn here and here, and this author for examples), but few have the public recognition of Elizabeth Warren.

Here is a graphic from the Warren article: (Click to enlarge)

At the center of the Warren article are the changes in employment markets that have impacted the traditional middle class strength of America. Other work has shown that jobs have been lost and are not coming back. Of the total increase in unemployment in this recession (nearly 9 million), more than 5 million are jobs that have permanently disappeared. See the following graph:

This has contributed to unprecedented duration of unemployment as seem in the following graph.

The New York Times recently published the following group of graphics detailing the changing economic map of the U.S. population.

Elizabeth Warren is simply adding an exclamation point to the situation that others have been describing. But a very welcome addition to the discussion it is.

Bank of America (BAC) annouced Wednesday that they will repay the $45 billion it received from the TARP in 2008. According to Greg Farrell and Justin Baer, at ft.com (here), BAC will use $26.2 billion in available cash and raise $18.8 billion in additional capital to cover the payment.

The $18.1 billion in capital will be raised with the issuance of "common equivalent securities", according to Sue Chang at The Wall Street Journal's MarketWatch.com (here). Also from Chang: "Repurchase of TARP preferred stock is expected to reduce income available to common shareholders in the fourth quarter by $4.1 billion, as the book value of the preferred is less than the amount paid," said the financial firm in a statement. Another item mentioned by Chang is a plan for BAC to sell $4 billion in unspecified assets.

The FSB (Financial Stability Board) of the G-20 has created a list of 24 banks and 6 insurance companies that pose significant risk to world financial systems and require special oversight. The list has not been officially released, but 30 names have been mentioned at ft.com and a list has been published by the editor at Wall Street Pit.

Banks

Steve Hanke at The Cato Institute has constructed the following picture of worldwide leverage (here), based on dollar denominated activities.

If you talk to someone who is in their early 40s, they are likely to tell you that they have seen two bull markets and two bear markets in their adult lives. Because their experience has conditioned them to expect that cycle to repeat, many of this vintage will tell you it is time for another bull market. In fact, older investors with much more experience may have a completely different perspective. For someone with 40 or 60 years of market experience, there may be a different possibility considered. Based on the longer time frames, the possibility of a long term bubble may be recognized.

Barry Ritholtz at The Big Picture (here) has a telling graph, courtesy of Ron Griess at The Chart Store.

A yet-to-be identified Canadian family-owned real estate organization (from Toronto) has bought the Pontiac Silverdome $583,000. It will reportedly be used as an indoor soccer facility. The cost to build the 80,000 seat arena in 1975 was $55.7 million. That would be $227 million in 2009 dollars.

Two days ago it was solar power panels. On Wednesday, A-Power Energy Generation Systems (APWR), a Chinese wind turbine maker, announced (see New York Times article by Kate Galbraith here) plans to start construction of a wind turbine production plant somewhere in the U.S. next year.

A-Power has signed an agreement with private equity firm US-REG (U.S. Renewable Energy Group) to locate a site for the new plant and to participate in the development and construction of the facility. Initially the plant is expected to to be 320,000 square feet and produce 1,100 megawatts of wind energy turbines annually, enough to power 330,000 homes. The facility is expected to employ approximately 1,000 American workers. The announced plan calls for many of the key wind turbine components to be sourced from U.S. manufacturers, further expanding the number of jobs created in the United States. Of course, new construction will also produce jobs of a less permanent nature.

Goldman Sachs (GS) has apparently decided that it has a public relations disaster on its hands and is starting a campaign to turn that around. The firm has pledged $100 million a year for programs to help small businesses. The pledge will be fulfilled annually for five years for a total commitment of $500 million, and will be overseen by a panel headed by Warren Buffett. Specific items to be included in the "good works" are business education, technical assistance and venture capital investments. Presumably the venture capital part will have a possibility of providing a return to Goldman.

Here is an excerpt from an article at ft.com by Francesco Guerrera, Justin Baer and Tom Braithwaite:

Daniel Gross, writing in Slate (here), said there was an outside chance that employment could show an increase by the end of the year, quoting Michael Darda, chief economist at MKM Partners.

The reasons cited include:

The PBGC (Pension Benefit Guarantee Corporation), a GSE (government sponsored enterprise), reported a total asset deficit of approximately $22 billion for fiscal 2009. This was almost exactly double the deficit for 2008. The official news release by the PBGC can be read here.

In the annual report to Congress, the PBGC states that the potential additional exposure to future shortfalls and plan failures is now $168 billion. This is an increase of $121 billion from the corresponding figure ($47 billion) at the end of fiscal 2008. The use of the word "future" in the press release implies that this is in addition to the $33 billion already recognized in 2008 and 2009. The total would then be $202 billion.

The FHA insures approximately $680 billion of single family home mortgages. An audit, conducted by Integrated Financial Engineering of Rockville, MD, found that FHA reserves against losses had dropped to $3.6 billion (0.53%) as of September 30. This was due to losses because of defaulting mortgages.

According to law, the minimum required reserves are 2%, or $13.6 billion currently. If the FHA exhausts its reserves, the government is obliged to make future loan guarantees in place of the agency. If this happens, it would be the first such occurrence since the FHA was formed in 1934. In the past year, the FHA has consumed $9.3 billion of reserves. One might conclude that a similar experience for the next 12 months would put the agency close to $6 billion in the red. However, the accounting is more complicated than that, as we shall see later in this article.

Sen. Christopher Dodd (D, Connecticut), Chairman of the Senate Banking Committee, has offered legislation that would extensively revamp regulation of U.S. banks. Stacey Kapur, at American Banker, has a complete review of the proposal (here). This is a subscription service and, if access is not available, the article can also be found at Financial-Planning.com (here).

The Dodd reforms go far further than other proposals from the House Financial Services Committee, Chairman Barney Frank (D, Massachusetts) and the Obama administration. Some of the specifics:

John S. Reed, who was CEO of Citicorp for 14 years before the 1998 merger with Travelers (TRV) and then co-CEO of Citigroup (C) with Sandy Weill until Reed's retirement in 2000, says he was wrong. A Bloomberg (here) article by Bob Ivry quotes Reed.

Lawmakers were wrong to repeal the Depression-era Glass- Steagall Act in 1999, Reed said. At the time, he supported overturn of the law, which required the separation of institutions that engaged in traditional customer banking services from those involved in capital markets.

President Obama signed into law today an extension until April 30, 2010 of the home buyers' tax credit. Contracts signed by April 30 must close by June 30 to qualify. The new law has several provisions not in the existing law:

• Income limits have been increased to $125,000 for individuals and $225,000 for couples. These were formerly $75,000 and $150,000, respectively.
• Current home owners who have lived in their home for five of the past eight years are eligible for a tax credit of $6,250.
• Qualifying home prices must not exceed $800,000.
• First time home buyers continue to be eligible for an $8,000 tax credit.

U.S. Rep. Barney Frank wants to publish a list of shame. According to Alison Vekshin at Bloomberg.com (here), Frank wants to make public the name of any firm that is required to address capital requirements under the proposed new law. This is a change from Frank's original position which would have kept the names of challenged firms secret.

This is akin to the kiss of death. Immediately upon public exposure, the ability to raise capital will be compromised, just at the time when the firm is being required to do just that. Of course, keeping the names secret is withholding relevant information from investors. This is the "damned if you do and damned if you don't" scenario.

The UK is joining The Netherlands and Gernamy in forcing the break-up of banks that can't survive without government support. The Royal Bank of Scotland (RBS), Lloyds Bank (LYG) and Northern Rock wiil be broken up, according to an article at ft.com by Angelo Faiola (here).

This follows the news a day earlier that both Lloyd's and RBS have asked for £54 billion in additional government support between them (here).

From the 5-Min. Forecast (here) comes the following graphic:

With consumption constituting around 70% of the economy in recent years, a contraction of nearly 10% in real personal income less transfer payments is not supportive of economic growth.

Chris Morrison at bnet.com says that clean coal technology is in real trouble. The bottom line is cost; an estimate (from a report released Thursday by the pro-CCS Global Carbon Capture and Storage Institute) is that costs will increase 78%, on average, for electricity from burning coal. Chris also says:

Nevertheless, everything could work out perfectly and clean coal could be spreading in 2030. By that time, CO2 concentrations in the atmosphere may be over 500ppm. That’s no problem if the climate change skeptics are right; if the 97% of climatologists who study climate change are right, that number would mean we’re in for some major upheaval.

Bob Willis, writing at Bloomberg.com, reports that Prof. Joseph Stiglitz, Nobel Laureate and Columbia University economics professor, is skeptical that the recession has ended. He cites the need for a GDP growth rate to be sustained in the range of 3.0% to 3.5% just to provide jobs for new workers entering the workplace. Growth has to be higher than that to bring back jobs for more than 8 million that have lost them in the current recession.

A contrary view comes from Jon T. Markham at MoneyMorning.com. Jon writes about a report from ISI (International Strategy & Investment) which gives data about a very robust global economic recovery. Some examples are third quarter GDP growth of 12% for China and more than 8% for Korea, and industrial production in Taiwan up 51% (annualized rate). Other booming economic reports are coming from Japan and Australia.