conceptwizard

Oh Yeah, The Economy Is Improving

The Center on Budget and Policy Priorities (CBPP) in Washington, DC monitors and calculates the gap between the fifty states' tax revenues and expenditures.
The CBPP also studied what kinds of budget decisions the states have already made because of the crisis. Key findings include the following:

27 states have reduced health benefits for low-income children and families;
25 states are cutting aid to K-12 schools and other educational programs;
34 states have cut assistance to state colleges and universities;
26 states have instituted hiring freezes;
13 states have announced layoffs; and
22 states have reduced state workers' wages.
Since the worst of the states' budget shortfalls lies ahead, we can expect all of these numbers to deteriorate further.

These state actions not only undercut the federal government's short-term stimulus goals; they also impose long-term costs on the economy in the diminished health and education of the U.S. workforce. Just when the mass of Americans need more help and support from their state governments, our economic system provides them with less. This raises the human and fiscal costs of the crisis. It worsens in the cities and municipalities.

A rising stock market is not a sign of economic recovery. It is a sign of mis-directed funds enabling a broken system to criple along at the expense of the taxpayer.

Consumer Sentiment Reaches ‘Fragile’ High

Vacancies at U.S. shopping centers rose in the third quarter to a 17-year high as unemployment climbed, consumers cut spending and stores closed Reis Inc. said. Vacancies at neighborhood and community shopping centers increased to 10.3%, the highest level since 1992, from 8.4% a year earlier.

Rent for office space is falling at the fastest pace in more than a decade as vacancies create a glut and landlords slash prices to attract tenants. Nationwide, effective office rents fell 8.5% in the third quarter compared with the same period a year ago according to Reis Inc.

U.S. apartment vacancies rose to 7.8% in the third quarter, the highest since 1986 Reis Inc. said. Actual rents paid by tenants, known as effective rents, declined 2.7% from a year earlier. Asking rents, or what landlords sought, fell 1.8% from a year earlier.

Real people with real problems should be asked how they feel. 2 million jobs lost every month and a home forelosure every 13 seconds. 6500 per day.

Economic Externalities

Investors have been playing this weak-dollar trade for years, diverting more and more dollars into commodities, foreign currencies and foreign stock markets. This is the Third-World way of asset allocation.

Corporations play this game for bigger stakes, borrowing billions in dollars to expand their foreign businesses. As the pound slid in the 1950s and '60s and the British Empire crumbled, the corporations that prospered were the ones that borrowed pounds aggressively in order to expand abroad. Though British equities rose in pound terms, they generally underperformed gold and foreign equities. At the end of empire, the giant sucking sound was from British capital and jobs moving offshore as the pound sank.

Bloomberg U.S. Financial Conditions Index Reaches a 26-Month High

In a sign that more banks are under great pressure from the recession, 34 financial institutions did not pay their quarterly dividends in August to the Treasury on funds obtained under the Troubled Asset Relief Fund (TARP). The number almost doubled from 19 in May when payments were last made, and also raised questions about Treasury's judgment in approving these banks as "healthy," a necessary step for them to get TARP funding.

U.S. Economic News Offers Glimmers of Hope for Housing, Service Sectors

A foreclosure every 13 seconds, 6600 per day in the USA, combined with 2 million job losses per month, will squash any hope of recovery.
Just think of the enormity of what is happening.
Bail out the banks, give those making an average of $100,000 a new car. Nothing is being done o slow this juggernaut of devastation.

Bracing for Rising Interest Rates

As long as the FED is fighting deflation like it is, there is no risk of rising rates.

Is This Market Overvalued? Not Yet

So far this year, nearly all of the earnings improvements have been achieved through major cost-cutting efforts. Overall selling and administrative costs among S.& P. 500 companies fell 5.7 percent in the second quarter versus the period a year earlier, according to a recent report by David J. Kostin, the chief United States equity strategist at Goldman Sachs.

This represents far more drastic cuts than were undertaken in the recessions of 1991 and 2001. Still, “you can only cut so much,” said Howard Silverblatt, senior index analyst at S& P. “At some point, you need to start seeing the business actually grow. You need to see increased sales” — sometimes called “top line” growth. That’s why Mr. Silverblatt says that revenue — not earnings — “will be the most important number for investors to watch.” The revenue declines are even more staggering on a dollar basis. From June 2008 to June 2009, revenue of the 500 companies tumbled by a total of $1.15 trillion. “That’s more than the entire fiscal stimulus,” Mr. Silverblatt said.

Sure, take ride on the never land equity train.

Don't Expect Tax Breaks to Boost Hiring

Nationwide, effective office rents fell 8.5% in the third quarter compared with the same period a year ago, the steepest year-over-year decline since 1995, according to Reis Inc., a New York real-estate research firm.

The decline came as companies returned a net 19.6 million square feet of space to landlords in the third quarter, slightly more than in the second quarter. For the first three quarters of this year, the net decline in occupied space totaled a record 64.2 million square feet, the highest so-called negative absorption recorded since Reis began tracking the data in 1980. (That doesn't count space that left the market as a result of the 2001 terrorist attacks.) The vacancy rate, meanwhile, hit 16.5%, a five-year high, according to Reis.

Companies are trying to survive not hire.

The Trouble with 401ks and Bond ETFs

The revenue that banks and credit unions generate by letting customers overspend their accounts, then charging them a fee, increased 35 percent in two years, the Center for Responsible Lending reports in a study released Tuesday.

Culling figures gathered by the Federal Deposit Insurance Corp., the consumer advocacy group found that customers paid $23.7 billion in overdraft fees in 2008, up $6.2 billion from two years before.

In the past 12 months, an estimated 51 million Americans spent more than they had in their checking accounts, triggering either an overdraft or non-sufficient funds fee, the study found.

People have no money for retirement because the banks bleed us dry. We work in a debt system.

Mid-Cycle Meltdown: Jobless Claims for October 08, 2009

Obama reacted predictably to the recent unemployment surprise. He first pointed out that “employment is the last thing to recover from a recession,” and concluded that “…we are going to need to grind out this recovery, step by step.” Brilliant.

Not one word on measures to help out the staggering number of unemployed workers, 1.4 million of which will have their benefits dropped by the end of the year. Behind them are millions more workers who’ve been unemployed for over six months — 5.4 million and counting.

All Obama is offering is “hope” that the economy will get better, an illusion shared by most of the mainstream media. Sometimes, however, the truth sneaks into Big Media. This from the New York Times:

“…the underlying weakness of the economy will probably reassert itself, say experts. After years of borrowing against homes and cashing in stock to spend in excess of their incomes, many Americans are tapped out. Austerity and saving have replaced spending and investment in many households, constraining the economy.” (October 2, 2009)

When an economy is dependent on 70 percent consumer spending and the nation’s consumers are effectively bankrupt, recovery comes from…the government. Indeed, the economic “green shoots” that the Democrats still obsess over were real, and based on government programs such as the highly touted Cash for Clunkers, and tax credits for first time homeowners, while the financial recovery was simply banks using bailout money to gamble on Wall Street.

It is estimated that these government subsidies resulted in 700,000 car sales and potentially 400,000 home sales, having a positive ripple effect on other parts of the economy that contribute to the making and distributing of cars and houses.

Cash for Clunkers has since ended and car sales are plummeting: Ford is down 5 percent, Toyota 13 percent, Honda down 20 percent, Chrysler down 42 percent, and GM down 45 percent (Bloomberg, October 2, 2009).

The homeowner subsidy ends soon, and with it the second economic pillar will have been removed, leaving Wall Street gambling to uphold the barely-functioning economy.

Unemployment: Is Hiring Around the Corner?

Try asking a small business owner whose bank is strangling him by cutting credit lines, while his inventory is dwindling, if he about to rehire in mass numbers.

The banks are crippling American small business and the consumer and the Obama Admin and Congress are letting it happen. Their answer is to use rebates and free cars.

We already lent the banks the money, with no stipulation for them to lend it back out.

Unemployment: We're Not Out of the Woods Yet

This past week the BLS released the September unemployment statistics and they worsened as usual, as America enjoys its recovery.

U-1–Those unemployed 15 weeks or longer, as a percent of the civilian labor force was 5.4%.

U-2-Job losers and persons who completed temporary jobs, as a percent of the labor force was 6.8%.

U-3-Total unemployed, as a percentage of the civilian labor force, the official unemployment rate, 9.8%.

U-4-Discouraged workers 10.2%.

U-5-Total unemployed plus discharged workers, plus marginally attached workers 11.1%.

U-6-Total unemployed as a percent of the civilian labor force 17%.

If the birth/death ratio is removed, U-6 is in reality 21.3% total US unemployment. The estimate is that 824,000, more jobs may be extracted from the payroll count for the 12-months ended next March. Such a revision would be the biggest since 1991. The BLS is underestimating job losses deliberately and has been for a long time. That would mean September’s loss would be some 300,000 not 263,000.

Such a revision would put job losses not at 4.8 million but 5.6 million jobs.

Jobless Claims Fall to Lowest Level in 37 Weeks

Increasing the amount of claim weeks available for the unemployed has had an impact on these numbers as well.

TALF's Progress Is Painfully Slow

Bernanke will not give up the hope of resuscitating securitization because the financial mandarins who employ the Fed chief see it as an exportable model which will give them greater control over the global financial system. This is not taken lightly by the powers behind the curtain. The beauty of securitization is its utter simplicity; it simply transfers the authority to generate credit (money) from highly-regulated banks to rogue players in the shadow banking system. By borrowing short to invest in dodgy long-term assets, fund managers and PE smarties are able to expand credit to unimaginable levels, skimming off fat bonuses and salaries for themselves while the monster bubble limps slowly towards earth.

Fed Policies: Outdated Tactics, Modern Crisis

We know that Wall Street has not learned much from the crash it helped instigate. We know that our government, whatever its stated desire to clean up the markets and reform the financial behemoths, lacks the willingness and perhaps the clout to rein in the real power centers. We are not sure if they have been “captured” by them, or just lack the guts to take on institutions and individuals that helped fund their rise to power.