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JUNE 2012: GLOBAL MACRO TIPPING POINT - (Subscription Plan III)

GROSS DOMESTIC DISTORTIONS: GDP Does Not Stand for "Gross Distortional Propaganda" despite Government Actions! - The GDP presently being used to reflect Economic Growth is based on 1- A Now Flawed Economic Growth Formula, 2- Uni-Directional Inflation Gimmicks such as Hedonics, Substitution and Imputation to name only a few, 3- A Deflator that is even lower than the bogus CPI to keep GDP reporting articifically high, 4 - A Process of Government Gaming of the formula. Real Growth in the US is negative and has been for sometime. This is clear to the man on the street but something that those in the Ivory Towers can't comprehend because their misprogrammed computer screens are giving them flawed analysis.  - The "Peek Inside" shows the detailed coverage available this month.

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JUNE 2012: MONTHLY MARKET COMMENTARY (Subscription Plan II)

MISGUIDED PUBLIC POLICY: Could Irresponsible Populist Policies be Steadily Destroying the System? - If you employ a decision making process that is based on an absurdly expensive electioneering hurdle, to decide on highly complex matters, debated through the beliefs in false economic theory, with highly polarized views - is it then any wonder we get either gridlock, kick-the-can-down-the road or pork barrel politics? We have a flawed and inoperable system that is doomed to waiting for crisis events to take actions that then have little probability of success. . MORE>>

MARKET ANALYTICS & TECHNO-FUNDAMENTAL ANALYSIS

JUNE 2012: MARKET ANALYTICS & TECHNICAL ANALYSIS - (Subscription Plan IV)

The market action since March 2009 is a bear market counter rally that has completed a classic ending diagonal pattern. The Bear Market which started in 2000 will resume in full force when the current "ROUNDED TOP" is completed. We presently are in the midst of of a "ROLLING TOP" across all Global Markets. We are seeing broad based weakening analytics and cascading warning signals. This behavior is typically seen during major tops.  This is all part of a final topping formation and a long term right shoulder technical construction pattern.  - The "Peek Inside" shows the detailed coverage available this month.

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	PART I - Understanding FINANCIAL REPRESSION
	PART II - FINANCIAL REPRESSION in Europe
	PART III - FINANCIAL REPRESSION in the US & ASIA
	PART IV - Preparations for FINANCIAL REPRESSION

Password: macro

A PRIMER ON THE ECB

The Bang! Moment is Here 06/16/12 John Mauldin

DEBT SATURATION: Not Just a Developed Economies Problem

Asia's Downside Risk And The Three Big Hopes 06/21/12 Zero Hedge

1. Hope number one is that the US will not fall off a “fiscal cliff” in early 2013.
2. Hope number two is that Europe can continue to muddle through.
3. Hope number three is China. Can China pull Asia out of the current morass?

EU: Imports Plummet

Europe's Economic Implosion In One Chart 06/21/12 Zero Hedge

From SMRA:

Following consecutive monthly gains, Exports to Europe dropped a massive $4.0 billion in April, the largest monthly decline dating back to January 2005, including a $2.8 billion drop to the EU alone. In particular, Exports to Germany declined $0.4 billion in April and are now only up about 0.2% over the past year. Overall, Exports to Europe are now down 2.7% from April 2011, the first yearly decline since February 2010. The recent slowdown of Exports to Europe supports the FOMC assessment that sluggish economic growth in Europe is likely to affect trade with the US. 

The easing of export growth does not bode well for US economy.

And since records before 2005 show more of the same, one can simply say that exports to Europe had their biggest monthly drop ever.

EU - Germany Beginning to Signal Capitulation

Germany set to allow eurozone bailout fund to buy troubled countries' debt 06/19/12 The Guardian

Angela Merkel poised to remove opposition to direct lending by rescue fund in move seen as step towards sharing debt burden. She is poised to allow the eurozone's €750bn (£605bn) bailout fund to buy up the bonds of crisis-hit governments in a desperate effort to drive down borrowing costs for Spain and Italy and prevent the single currency from imploding.

• It is understood the money would come from the €500m European Stability Mechanism and its predecessor, the €250m European Financial Stability Facility.
• Last week, EU leaders had agreed a line of credit to Spanish banks through the Spanish government, a move that failed to reduce Spanish bond yields. There was speculation that the full total required could end up being far more than €100bn. Madrid was forced to pay a record 5.07% at a debt auction on Tuesday morning to borrow €2.4bn for just 12 months, prompting analysts to say Spain is edging perilously close to needing a full-blown rescue.
• The ECB purchased €210bn of mainly Greek bonds in 2010, but its involvement was stopped partly because of German opposition.

Debt crisis: Spain and Italy to be bailed out in £600bn deal 06/19/12 The Telegraph

European leaders are poised to announce a £600 billion deal to bail out Spain and Italy, it emerged at the G20 summit on Tuesday night.

• Two rescue funds are to be used to buy the debts of the troubled economies, the cost of which have reached record highs in recent weeks.
• It is hoped that the move, which represents a substantial shift in policy for Germany’s chancellor, Angela Merkel, will send a strong signal to financial markets that Europe’s biggest economy is finally prepared to back its weaker neighbours.
• Under the proposed deal, two European rescue funds – the £400billion (€500 billion) European Stability Mechanism (ESM) and the £200billion (€250  billion) European Financial Stability Facility (EFSF) – will buy bonds issued by European countries.
• The European Central Bank previously bought about £170 billion (€210billion) of bonds in this way but stopped last year.
• White House sources indicated that a "new framework" to shore up the single currency would be unveiled at next week's summit in Brussels.
• world leaders agreed to increase resources to the International Monetary Fund (IMF). China offered another £27 billion, and countries including Brazil, Russia and India each pledged £6.3 billion, under a scheme to double the IMF’s fighting fund. The US refused to contribute further funds.
• Leaders of major European countries meet in Rome on Friday ahead of a crucial EU-wide summit next week. Negotiations at the summit are expected to focus on plans for a European-wide banking union.

ANYTHING OVER 4.5% TYPICALLY INCREASES MARGIN REQUIRMENTS

EU BANKS - A Serious Short Term Lending / Funding Squeeze

EUREPO Curve Inversion Signals Major European Funding Stress 06/19/12 Zero Hedge

the EUREPO curve - which measures how much banks have to pay to borrow, when pledging or repo-ing assets, for loans - is not only un-manipulated as of yet but is flashing very bright warning signals that all is absolutely not well in European bank liquidity. The 'signal' that is clear is the inversion of this curve, which means simply that it is significantly more expensive to repo (borrow) in the ultra-short-term than for a much longer-term. This is likely due to the banks' need to fund deposit outflows, thus requiring the banks to 'find' that cash (by 'lending' their assets as security for the loan). The loss from the counterparty bank seizing your collateral if it went broke is far higher over a longer-period and thus there is a very strong preference to only repo overnight relative to 3 months, for instance. This repo curve inversion signals a total lack of trust among European banks (in even the shortest of tenor), no belief in short-term 'bailout effects' lasting more than weeks, as well as a huge demand for cash (repo) that suggests deposit outflows remain very active. The following charts shows the gradual inversion of the EUREPO curve from its 'normal' upward-sloping levels of 3/28 to its massively inverted shape currently...

...and over time it is clear that the shortest-end of the repo curve (overnight lending - solid green) has become - in the last few weeks - the most in demand relative to the rest of the short-end of the curve (1 month repo - dashed green).

EU ROADMAP - Political & Banking Union

EXCLUSIVE - SECRET EU SUMMIT DOCUMENT shows first step to banking union 06/17/12 Telegraph

A classified draft of next week’s EU summit conclusions is the first step on an emerging “roadmap” to a:

1. Banking Union: Pooling debt via eurobonds and
2. Political Union: via EU treaty change over the next 10 years.

FLIGHT TO SAFETY: Becoming Pronounced

Risk Markets Remain Macro-Driven 06/22/12 Zero Hedge

Markets remain mired in their addiction to liquidity and the global macro-picture seems synchronized to this central bank largesse with an inability to function without at least the hope of more QE around the world. Nowhere is this more clear than in the extreme high levels of correlation across global risk assets. Barclays notes that the correlation between global equities, the USD, emerging market FX, high-grade credit, and commodities remains near cyclical highs and rising. Furthermore, 'safe haven' correlations are at record levels relative to risk assets (especially US Treasuries) and they remain tactically biased to fade any rally here as the correlations have driven an 'extreme valuation gap' between 'safe haven' and risky assets - which creates a strong potential for 'spasmodic relief rallies'.

Financial markets remain macro-driven...

and 'safe-haven' correlations have become even more exaggerated...

FLIGHT TO SAFETY: Becoming Pronounced

Singapore Banks’ Deposit Surge Shows Safe-Haven Status in Euro-Area Crisis 06/19/12 Bloomberg Brief

• Bank deposits are flooding into Singapore, an indication of the city-state’s rising status as a safe haven for global, especially European, investors.
• Foreign currency deposits held in Singapore’s banks rose 43 percent year-on-year in March compared with single-digit growth eight months before and a slight contraction a year earlier, according to MAS data.
• In contrast, growth in euro-denominated deposits held by euro-area banks has slowed since the debt crisis erupted in May 2010.
• Growth in euro-area overnight deposits by households and non-financial corporations fell to 0.3 percent per annum in March compared with 12 percent in April 2010 and average growth of 7.3 percent since January 2004, according to ECB data.
• Even in Germany, one of the euro-zone’s healthiest members, deposit growth has failed to keep pace with the 10-year average.
• Singapore dollar denominated deposits have also surged, rising 46 percent to 484 billion Singapore dollars in April compared with 332 billion Singapore dollars in August 2008, prior to the Lehman Brothers collapse.
• Some of this increase was likely to have been the result of the post-crisis improvement in economic activity which increased the funds available for placement on deposit. Such a sharp increase in SGD deposits suggests safe-haven behavior as well.
• Between 2000 and 2007, SGD deposit growth averaged 7.8 percent per annum, whereas post-Lehman deposit growth averaged 11 percent.
• The Singapore dollar has been largely insulated against the pickup in deposits, in part because most of the deposit growth has remained in foreign currencies.
• For deposits converted into SGD, the Monetary Authority of Singapore has helped dissipate appreciation pressures, increasing its net long position in foreign currency forwards and futures contracts by $38.5 billion, or 44 percent, between February and August 2011, according to MAS data.
• The Singapore dollar is backed by an ample current account surplus - 19 percent of GDP - and a solid AAA rating. The world’s strongest bank for two years running, Oversea-Chinese Banking Corporation (OCBC), is Singaporean.
• Two other Singaporean lenders – United Overseas Bank and DBS Group Holdings – are among the 10 strongest banks in the world, in seventh and eighth place respectively, Bloomberg data show.
• Singapore’s central bank has a reputation for taking pre-emptive measures to preserve real returns. At the same time, the government has no incentive to inflate away the real value of its debt, given its history of budget surpluses.
• Indeed, government bond issuance is used for investment – largely in support of the benchmark yield curve – not for financing government spending. As the sovereign debt overhang in the U.S., euro area and Japan is unlikely to be rectified soon, Singaporean banks will likely continue to lure deposits from offshore investors seeking to diversify risk.
• Foreign investors may still wish to keep their funds parked in Singapore, ASEAN’s financial hub, even when global growth returns to a more stable and buoyant path. The region’s financial integration by 2015 may establish the foundation of an economic powerhouse with potential to rival China and India.

BOND BASICS or the DUBIOUS DEMAND

FUNDMENTALS:

DEMAND:

• High Demand with Fixed Supply means Higher Prices
• Higher Prices means lower Interest Rates

SUPPLY:

• High Supply with Fixed Demand means Lower Prices
• Lower Prices means higher Interest Rates

BOND PROFITS or YIELD

• Coupon Payments (interest rate)
• Capital Gains or Change in Price

SITUATIONAL ANALYSIS:

1. Extreme Supply (Sovereigns, Corporations, Financials)
2. Weakening Demand
   • Elevated Prices
   • Less Capital Available
   • Heightened Risk of Default

DUBIOUS DEMAND

• Where is all the demand coming from?
  • Central Bank Purchases & Monetization = Insufficient
  • CB's just off-setting de-leveraging of Shadow Banking System.

SOMETHING IS SERIOUSLY WRONG SOMEWHERE WITH REAL DEMAND.

ARTIFICAL DEMAND IS BEING CREATED SOMEWHERE AND SOMEHOW?

SWAPS: How Things REALLY Work

The Greatest Hoax Ever Perpetrated on Mankind 06/15/12 Rob Kirby

A few years ago, when J.P. Morgan grew their derivatives book by 12 Trillion in one quarter [Q3/07] – I did some back of the napkin math – and figured out how many 5 and 10 year bonds the Morgue would have necessarily had to transact on their swaps alone – if they are hedged.  The bonds required to hedge the growth in Morgan’s Swap book were 1.4 billion more in one day than what was mathematically available to the entire domestic bond market for a whole quarter?

Put simply:

Interest Rate Swaps create more settlement demand for bonds than the U.S. issues.

This is why U.S. bonds “appear” to be “scarce” – which the bought-and-paid-for mainstream financial press explains to us is “a flight to quality”.  Better stated, it’s a “FORCED FLIGHT [or sleight, perhaps?] TO FRAUD”.

Assertions that netting “explains” this incongruity are a NON-STARTER.  Netting generally occurs at day’s end – the math simply does not even work intra-day.

Further Evidence of Gross Malfeasance in the U.S. Bond Market

Back in 2008, at the height of the financial crisis, folks are reminded how the Fed and U.S. Treasury were unsuccessful in finding a financial institution to either acquire or merge with Morgan Stanley.  Unfortunately, Morgan Stanley’s financial condition has continued to deteriorate:

Analysis: How Morgan Stanley sank to junk pricing

REUTERS | June 1, 2021 at 5:45 pm |

(Reuters) – The bond markets are treating Morgan Stanley like a junk-rated company, and the investment bank’s higher borrowing costs could already be putting it at a disadvantage even before an expected ratings downgrade this month.

Bond rating agency Moody’s Investors Service has said it may cut Morgan Stanley by at least two notches in June, to just two or three steps above junk status. Many investors see such a cut as all but certain.

Many U.S. banks are at risk of a downgrade, but ratings cuts could affect Morgan Stanley most because of the severity of the cut and because of its relatively large trading business…..

The “take-away” from the article above is that Morgan Stanley is not a particularly good credit and the trajectory of their “credit” has been “negative” for some time – particularly since the financial crisis of 2008 when the Fed/U.S. Treasury could not find anyone willing to acquire them.  The Reuter’s scribe also pointed out something highly relevant when she said Morgan Stanley has a “relatively large trading business”.  Let’s explore this a little bit deeper.  According to the U.S. Office of the Comptroller of the Currency [OCC] Morgan Stanley’s derivatives book stood at 52.2 TRILLION at Dec. 31/2011.  So to say that Stanley’s trading business is “relatively large” is perhaps a gross understatement [or maybe an intentionally misleading statement?] – since it is currently the third largest “known” derivatives book in the world:

Click To Enlarge

Ladies and gentlemen, the ENTIRE GLOBAL BANKING COMMUNITY DOES NOT HAVE SUFFICIENT CREDIT LINES, FOR MS, TO ALLOW MORGAN STANLEY TO GROW THEIR SWAP BOOK BY 8 TRILLION IN 6 MONTHS.  Do remember, the Federal Reserve has purview over Bank Holding Companies – so the Fed necessarily knows “who” the other side of these trades really is – and they are implicitly “comfortable” with the counter-party risk.

Ergo, Morgan Stanley necessarily had a NON-BANK counterparty for this 8 Trillion increase in the SWAPS component of their book.  The counter-party for Morgan Stanley’s swaps book is, by-and-large, the same counter-party as J.P. Morgan, Citi, B of A and Goldman.

Now, you have to think about “WHO” or “WHAT” would have the motivation to do this business with Morgan Stanley et al?   In light of the psychedelic, incomprehensibly large amounts of swaps being consummated between Morgan Stanley and this “unidentified” counterparty – it is most likely that the counterparty is none other than the U.S. Treasury’s Exchange Stabilization Fund [ESF] – an entity that is accountable to NO ONE, has absolutely ZERO oversight and operates above ALL LAWS.  It is HIGHLY probable that these trades are being used as a means of undeclared stealth bailout / recapitalization of Morgan Stanley on the public teat in conjunction with arbitrarily controlling the long end of the interest rate curve.

It’s all about national security/preservation of U.S. Dollar Standard.  The following underscores what lengths the governing apparatus will go to – to ensure the perpetuation of actual/perceived U.S. Dollar hegemony:

First reported by Dawn Kopecki back in 2006 when she reported in BusinessWeek Online in a piece titled, Intelligence Czar Can Waive SEC Rules,

"President George W. Bush has bestowed on his [then] intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye."

What this means folks, if institutions like J.P. Morgan, Citi, B of A, Goldman or Morgan Stanley are deemed to be integral to U.S. National Security - can be "legally" excused from reporting their true financial condition – including KEEPING TWO SETS OF BOOKS.  The entry in the Federal Register is described as follows:

The memo Bush signed on May 5, which was published seven days later in the Federal Register, had the unrevealing title "Assignment of Function Relating to Granting of Authority for Issuance of Certain Directives: Memorandum for the Director of National Intelligence." In the document, Bush addressed Negroponte, saying: "I hereby assign to you the function of the President under section 13(b)(3)(A) of the Securities Exchange Act of 1934, as amended."

A trip to the statute books showed that the amended version of the 1934 act states that "with respect to matters concerning the national security of the United States," the President or the head of an Executive Branch agency may exempt companies from certain critical legal obligations. These obligations include keeping accurate "books, records, and accounts" and maintaining "a system of internal accounting controls sufficient" to ensure the propriety of financial transactions and the preparation of financial statements in compliance with "generally accepted accounting principles."

Conclusion: 

The U.S. Bond market has been “gamed” beyond belief and the only institution in the world with the means and motive to conduct this business is the U.S. Treasury [ESF] in conjunction with/acting through the New York Federal Reserve.  As such, U.S. bond pricing and interest rates are set 100 % arbitrarily and today represent the BIGGEST FINANCIAL HOAX ever perpetrated on mankind. 

FRENCH ELECTIONS - Socialists Win AN Absolute Majority

French Socialists Win An Absolute Majority In Parliament 06/17/12 Zero Hedge

While everyone is focusing on Greece, we have news from France:

• FRENCH SOCIALISTS WIN ABSOLUTE MAJORITY IN PARLIAMENT, CSA SAYS
• FRENCH SOCIALISTS WON 320 SEATS, CSA SAYS; MAJORITY IS 289
• FRENCH SOCIALISTS WON'T NEED TO RELY ON LEFT FRONT, GREENS: CSA

Hollande's chief ministers, including Prime Minister Jean-Marc Ayrault, were elected in round one by scoring more than 50 percent of votes. Those in run-off contests, such as Finance Minister Pierre Moscovici, are expected to win their seats. Hollande's former partner Segolene Royal faces an uphill battle in the western city of La Rochelle against a popular dissident Socialist candidate. In all, 36 deputies were elected outright last weekend and 541 constituencies are up for grabs on Sunday.

The Socialists have been concerned that low turnout might weigh on their score. Turnout at 5 p.m. was 46.2 percent, 3 percentage points down on the 2007 election and below that of last Sunday, when the final turnout hit a new low at 57 percent.

In France, Socialists Win a Solid Majority 06/17/12 WSJ

• Because a Socialist-led coalition already controls the Senate, the upper house, Mr. Hollande will now have a supportive Parliament to back his policies.
• The Socialist Party and its allies won 314 of the National Assembly's 577 seats, according to results compiled by the French Interior Ministry. The tally shows that Mr. Hollande won't need to rely on the additional support of lawmakers from the Green and far-left Leftist Front parties.
• Mr. Hollande may have to shelve some of his costly proposals—such as hiring 12,000 civil servants a year—and instead resort to an unpopular mix of spending cuts and tax increases.
• The French president has been lobbying in favor of introducing euro bonds, a code word for jointly issued debt, to help countries such as Spain and Italy borrow at affordable cost. But Ms. Merkel has warned that any additional solidarity among Europeans would require forging a more integrated political union.
• The Franco-German debate could be heading into a stalemate because French people have shown little appetite for the idea of transferring more sovereignty to Brussels, where the European Union has its headquarters.

DEVELOPED COUNTRIES: Growth a Real Problem

The World's Biggest Consumer Goods Company Shows That Growth In Developed Markets Is Tanking 06/20/12 BI

FedEx Shipments Fall Suggesting Weaker Economy Ahead 06/21/12 Bloomberg

One of the oldest economic tricks in the book is to follow the level of FedEx pack- age shipments as a barometer of overall economic conditons; there is a strong cor- relation between shipments and the pace of real gdP. The latest announcement from the shipping giant suggests a weaker economy ahead. During its fourth quarter 2012 earnings conference call (ending May 31), aver- age daily volume of total u.S. package shipments at FedEx Express service were 2.490 million, 4.9 percent lower than year ago levels. This was the fifth consecutive quarterly decline on a year- over-year basis. FedEx’s economic forecast calls for calendar year 2012 u.S. gdP growth to be 2.2 percent with an associated 4.3 percent increase in industrial production – a key metric for the shipping/trucking industry. For calendar year 2013, gdP is expected advance by 2.4 percent. According to the company, the assumption of these forecasts are “successful management of the debt crisis in Europe and the avoidance of significant tax increases next year in the U.S.” Alan Graf, FedEx EVP and CFO said, the company believe domestic and global economic conditions will be impacted by the European debt crisis, slowing growth in Asia and the uncertainty these issues create.

GERMANY: A PMI Problem at the Core

The German Economy Has Cracked 06/21/12 BI

MACRO INDICATORS: SWIFT Payments

New Economic Indicators 06/21/12 ForexLive

ECONOMIC CONFIDENCE FALLING

That Is An Ugly Fall-Off In Economic Confidence 06/22/12 BI

US ECONOMY: Recovery is Over and Economy Deteriorating Rapidly

US RECOVERY: Stimulus Hasn't Worked. It is Camoflaging Something Deeper

51 Signs The Economy Is A Total Disaster 06/16/12 David Rosenberg

A year ago Fed consensus was for 4% GDP growth in 2012, now it looks like the economy will grow about half that pace. GDP growth forecasts are being lowered and this "goes down as the weakest recovery on record"

There is a lack of firepower in this recovery. It's the first time on record that the U.S. economy has gone 11 quarters into a recovery but failed to post 4% GDP growth a quarter.

This has been a surprisingly soft recovery given the scale of government stimulus

"…More than three years of 0% policy rates, a Fed balance sheet pregnant with triplets and now going on four years of $1 trillion-plus fiscal deficits — unheard of outside of a wartime economy"

US RECOVERY: Forget Camoflage, this is the Stark Reality of the Non-Recovery

The U.S. Economy By The Numbers: 70 Facts That Barack Obama Does Not Want You To See Economic Collapse

The following are 70 facts that Barack Obama does not want you to see....

$3.59 - When Barack Obama entered the White House, the average price of a gallon of gasoline was $1.85.  Today, it is $3.59.

22 - It is hard to believe, but today the poverty rate for children living in the United States is a whopping 22 percent.

23 - According to U.S. Representative Betty Sutton, an average of 23 manufacturing facilities permanently shut down in the United States every single day during 2010.

30 - Back in 2007, about 10 percent of all unemployed Americans had been out of work for 52 weeks or longer.  Today, that number is above 30 percent.

32 - The amount of money that the federal government gives directly to Americans has increased by 32 percent since Barack Obama entered the White House.

35 - U.S. housing prices are now down a total of 35 percent from the peak of the housing bubble.

40 - The official U.S. unemployment rate has been above 8 percent for 40 months in a row.

42 - According to one survey, 42 percent of all American workers are currently living paycheck to paycheck.

48 - Shockingly, at this point 48 percent of all Americans are either considered to be "low income" or are living in poverty.

49 - Today, an astounding 49.1 percent of all Americans live in a home where at least one person receives benefits from the government.

53 - Last year, an astounding 53 percent of all U.S. college graduates under the age of 25 were either unemployed or underemployed.

60 - According to a recent Gallup poll, only 60 percent of all Americans say that they have enough money to live comfortably.

61 - At this point the Federal Reserve is essentially monetizing much of the U.S. national debt.  For example, the Federal Reserve bought up approximately 61 percent of all government debt issued by the U.S. Treasury Department during 2011.

63 - One recent survey found that 63 percent of all Americans believe that the U.S. economic model is broken.

71 - Today, 71 percent of all small business owners believe that the U.S. economy is still in a recession.

80 - Americans buy 80 percent of the pain pills sold on the entire globe each year.

81 - Credit card debt among Americans in the 25 to 34 year old age bracket has risen by 81 percent since 1989.

85 - 85 percent of all artificial Christmas trees are made in China.

86 - According to one survey, 86 percent of Americans workers in their sixties say that they will continue working past their 65th birthday.

90 - In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

93 - The United States now ranks 93rd in the world in income inequality.

95 - The middle class continues to shrink - 95 percent of the jobs lost during the last recession were middle class jobs.

107 - Each year, the average American must work 107 days just to make enough money to pay local, state and federal taxes.

350 - The average CEO now makes approximately 350 times as much as the average American worker makes.

400 - According to Forbes, the 400 wealthiest Americans have more wealth than the bottom 150 million Americans combined.

$500 - In some areas of Detroit, Michigan you can buy a three bedroom home for just $500.

627 - In 2010, China produced 627 million metric tons of steel.  The United States only produced 80 million metric tons of steel.

877 - 20,000 workers recently applied for just 877 jobs at a Hyundai plant in Montgomery, Alabama.

900 - Auto parts exports from China to the United States have increased by more than 900 percent since the year 2000.

$1580 - When Barack Obama first took office, an ounce of gold was going for about $850.  Today an ounce of gold costs more than $1580 an ounce.

1700 - Consumer debt in America has risen by a whopping 1700% since 1971.

2016 - It is being projected that the Chinese economy will be larger than the U.S. economy by the year 2016.

$4155 - The average American household spent a staggering $4,155 on gasoline during 2011.

$4300 - The amount by which real median household income has declined since Barack Obama entered the White House.

$6000 - If you can believe it, the median price of a home in Detroit is now just $6000.

$10,000 - According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

49,000 - In 2011, our trade deficit with China was more than 49,000 times larger than it was back in 1985.

50,000 - The United States has lost an average of approximately 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001.

56,000 - The United States has lost more than 56,000 manufacturing facilities since 2001.

$85,000 - According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to all the tariffs.

$175,587 - The Obama administration spent $175,587 to find out if cocaine causes Japanese quail to engage in sexually risky behavior.

$328,404 - Over the next 75 years, Medicare is facing unfunded liabilities of more than 38 trillion dollars.  That comes to $328,404 for each and every household in the United States.

$361,330 - This is what the average banker in New York City made in 2010.

440,00 - If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to totally pay it off.

500,000 - According to the Economic Policy Institute, America is losing half a million jobs to China every single year.

2,000,000 - Family farms are being systematically wiped out of existence in the United States.  According to the U.S. Department of Agriculture, the number of farms in the United States has fallen from about 6.8 million in 1935 to only about 2 million today.

$2,000,000 - At this point, the U.S. national debt is rising by more than 2 million dollars every single minute.

2,600,000 - In 2010, 2.6 million more Americans fell into poverty.  That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

5,400,000 - When Barack Obama first took office there were 2.7 million long-term unemployed Americans.  Today there are twice as many.

16,000,000 - It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

$20,000,000 - The amount of money the U.S. government was spending to create a version of Sesame Street for children in Pakistan.

25,000,000 - Today, approximately 25 million American adults are living with their parents.

40,000,000 - According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades if current trends continue.

46,405,204 - The number of Americans currently on food stamps.  When Barack Obama first entered the White House there were only 32 million Americans on food stamps.

88,000,000 - Today there are more than 88 million working age Americans that are not employed and that are not looking for employment.  That is an all-time record high.

100,000,000 - Overall, there are more than 100 million working age Americans that do not currently have jobs.

$150,000,000 - This is approximately the amount of money that the Obama administration and the U.S. Congress are stealing from future generations of Americans every single hour.

$2,000,000,000 - The amount of money that JP Morgan has admitted that it will lose from derivatives trades gone bad.  Many analysts are convinced that the real number will actually end up being much higher.

$147,000,000,000 - In the U.S., medical costs related to obesity are estimated to be approximately 147 billion dollars a year.

295,500,000,000 - Our trade deficit with China in 2011 was $295.5 billion.  That was the largest trade deficit that one country has had with another country in the history of the planet.

$359,100,000,000 - During the first quarter of 2012, U.S. public debt rose by 359.1 billion dollars.  U.S. GDP only rose by 142.4 billion dollars.

$454,000,000,000 - During fiscal 2011, the U.S. government spent over 454 billion dollars just on interest on the national debt.

$1,000,000,000,000 - The total amount of student loan debt in the United States recently surpassed the one trillion dollar mark.

$1,170,000,000,000 - China now holds approximately 1.17 trillion dollars of U.S. government debt.  Yet the U.S. government continues to send them millions of dollars in foreign aid every year.

$1,600,000,000,000 - The amount that has been added to the U.S. national debt since the Republicans took control of the U.S. House of Representatives.  This is more than the first 97 Congresses added to the national debt combined.

$5,000,000,000,000 - The U.S. national debt has risen by more than 5 trillion dollars since the day that Barack Obama first took office.  In a little more than 3 years Obama has added more to the national debt than the first 41 presidents combined.

$5,000,000,000,000 - What the real U.S. budget deficit in 2011 would have been if the federal government had used generally accepted accounting principles.

$11,440,000,000,000 - The total amount of consumer debt in the United States.

$15,734,596,578,458.59 - The U.S. national debt as of June 7, 2021.

$200,000,000,000,000 - Today, the 9 largest banks in the United States have a total of more than 200 trillion dollars of exposure to derivatives.  When the derivatives market completely collapses there won't be enough money in the entire world to fix it.

FED EXPANDS OPERATON TWIST BY $267B in 2012

Fed Expands Operation Twist by $267 Billion Through 2012 06/20/12 Bloomberg

• Extends through end of 2012
• Total: $267B
• Maintains Current Pace

The Federal Reserve maintained the status quo by choosing to preserve its maturity extension program, Operation Twist, through the remainder of the year, pledging to purchase $267 billion in longer-term Treasury bonds between 6 and 30 years in duration.

• Although the decision to extend Operation Twist approximates 67 percent of the initial effort, the $44 billion per month pace of purchases is unchanged, as is the distribution of the buying program.
• Roughly 64 percent of the purchases will be made in the 6-10 year maturity buckets, with 4 percent in the 10-20 year maturities, 29 percent in the 20-30 year, and 3 percent in Treasury Inflation Protected Securities scheduled to mature between 6 and 30 years.
• Absent external stress to financial markets, this should put enough downward pressure on rates to keep the benchmark 10-year Treasury yield in a range of 1.5-to- 1.75 percent through year-end.
• While the central bank also moved to mark down its central tendency forecast of growth and employment this year and next, reflecting deceleration in recent economic data, it refrained from taking more aggressive action to bring down interest rates and bolster growth conditions via another round of large scale asset purchases.
• The central bank likely chose to keep the maturity extension program as a form of insurance should events in Europe place the nascent economic expansion at risk, or if domestic lawmakers do not address the fiscal cliff that carries with it $400 billion in tax hikes and an additional $200 billion in spending cuts beginning Jan. 1, 2013.
• The modest changes to the policy statement noting deterioration in the labor market and slower consumer spending are in line with current expectations for growth.

GROWTH PROJECTIONS

• The downward revision to the Fed’s central tendency forecast of growth to between 1.9 and 2.4 percent carries a midpoint of 2.15 percent and is in line with the Bloomberg consensus forecast of 2.2 percent growth this year.
• With growth tracking at 1.7 percent in the current quarter – slightly slower than the 1.9 percent that was observed in the first three months of the year – there is a chance that the central tendency forecast remains somewhat optimistic given risks to growth from the external sector and the fiscal cliff that will likely impact firm hiring and investment decisions and household spending decisions.

BERNANKE 'BEGGING' CONGRESS TO DO SOMETHING

• During the question and answer period in Ben Bernanke’s press conference, the chairman went out of his way to note that efforts by other areas of the government to address the daunting economic issues facing the U.S. economy – both fiscal and housing-related – would be helpful.
• Throughout the past year, Bernanke and other members of the Federal Reserve have gone out of their way to note that problems in the housing market and tight credit conditions are blocking the monetary transmission mechanism through which Fed policy feeds through to the real economy.
• Without the help of government policy directed at the housing industry, central bank monetary policy will likely continue to be rendered partially ineffective.

QE III or EXTENDED OPERATION TWIST - Increasing Probability for June FOMC

Fed Doves Ready to Act 06/17/12 Gavyn Davies

1- US Economy has slowed Markedly Since early Spring

2- Core Inflation is now Hovering Around the Fed's 2% Target

3- Financial Conditions Have been Tightening as the Economy Has Slowed

GOLDMAN: QE3 Coming Next Week 06/16/12 BI

EARNINGS: Expect our Anticpated Collapse in Earnings

Deconstructing Hopium In 3 Simple Charts 06/22/12 Zero hedge

Equity Prices track Earnings Estimates; Earnings track ISM; and Real-Time Surveys indicate ISM going down

1) Price Tracks Earnings

2) Earnings Track ISM

and 3) ISM Is Going Down...

EURO DIRECTION - Not A Clue!

Wall Street Has No Idea Where The Euro Is Heading 06/19/12 BI

ANALYTICS: 1- Earnings Showing Clear Signs of Having Topped

Three Charts Your Stockbroker Won't Want You To See 06/18/12 Zero Hedge

The following three charts from UBS suggest that things are not quite as rosy as one might believe. Between consensus growth expectations rolling over, the analyst upgrade/downgrade ratio turning negative once again, and recent changes in US growth remain positively ecstatic relative to global/regional changes; it would appear hope is a powerful (and hallucinatory) drug (as is QE kool-aid).

The progression of consensus earnings growth estimates is rolling over for 2012 and stalling for 2013...

The upgrade/downgrade ratio is turning back down (less upgrades than downgrades) and changing trend...

The US remains an extremely optimistic unch over the past 3 months for its earnings growth forecast change relative to considerable drops among most of the world's economies...

ANALYTICS: 2- Earnings Showing Clear Signs of Having Topped

Dose of Reality Hits Revenue Forecasts 06/19/12 WSJ

• Revenue expectations for the coming 52-week period have dropped slightly since early May for companies in the S&P 500.
• They had been rising steadily since November.
• Analysts have likely trimmed expectations due to troubles in Europe, which makes up about 22% of these companies' revenue.
• Even without a major global slowdown, the typical, high sales-growth period following a recession is over.
• Sales for companies in the S&P 500 rose at 6.5% in the first quarter, the slowest pace since they began expanding again in late 2009.
• The average of the preceding eight quarters had been a heady 10.7%.
• Now, expectations for the coming 12-month period are down to 4.7%, according to data from Thomson Reuters. Though that seems low, it actually may be a tad optimistic.
• Corporate sales correlate highly with nominal economic growth, which isn't adjusted for inflation. Nominal growth is seen around 4% in 2012 and 2013 in the U.S., while Europe should be weaker.
• If analysts are behind the curve in trimming sales-growth expectations, it wouldn't be the first time. On the eve of the Lehman Brothers collapse, and amid an as-yet-undeclared recession, year-ahead sales expectations were at an all-time high. By the following spring, they had slipped sharply and were too pessimistic.
• Even if we are merely in a slow patch look out below for expectations of revenue growth.

SAFEHAVEN INVESTMENTS: Gold Ahead of QE3

SocGen: Gold Could Surge Over 500% 06/20/12 SocGen

CRONY CAPITALISM: Social Unrest Lies Ahead

The Chart That Scares The "1%" The Most 06/20/12 Zero Hedge

Capitalists have been gripped by 'systemic fear' making them worry not about the day-to-day movements of growth, employment, and profit, but about 'losing their grip'. An interesting recent article by the Real-World Economics Review on the Asymptotes of Power focuses on the fact that the capitalists are forced to realize that their system may not be eternal, and that it may not survive in its current form. The authors fear that, peering into the future, the '1%' realize that in order to maintain (or further increase) their distributional power (their net profit share of national income - which hovers at record highs) they will have to unleash even greater doses of social 'violence' on the lower classes. The high level of force already being applied makes them increasingly fearful of the backlash they are about to receive (think Europe to a lesser extent) and nowhere is this relationship between the wealthy capitalists and social upheaval more evident than in the incredible correlation between the Top 10% share of wealth and the percent of the labor force in prison. In order to have reached the peak level of power it currently enjoys, the ruling class has had to inflict growing threats, sabotage and pain on the underlying population.

During the 1930s and 1940s, this level proved to be the asymptote of capitalist power: it triggered a systemic crisis, the complete reordering of the U.S. political economy, and a sharp decline in capitalist power, as indicated by the large drop in inequality.

As we can see, since the 1940s this ratio has been tightly and positively correlated with the distributional power of the ruling class: the greater the power indicated by the income share of the top 10 per cent of the population, the larger the dose of violence proxied by the correctional population. Presently, the number of ‘corrected’ adults is equivalent to nearly 5 per cent of the U.S. labour force. This is the largest proportion in the world, as well as in the history of the United States.

(1) they all adhere to the two dualities of political economy: the duality of ‘politics vs. economics’ and the duality within economics of ‘real vs. nominal’; and (2) they all look backward, not forward.

As a consequence of these common foundations, all existing explanations, regardless of their orientation, seem to agree on the following three points:

1. The essence of the current crisis is ‘economic’: politics certainly plays a role (good or bad, depending on the particular ideological viewpoint), but the root cause lies in the economy.
2. The crisis is amplified by a mismatch between the ‘real’ and ‘nominal’ aspects of the economy: the real processes of production and consumption point in the negative direction, and these negative developments are further aggravated by the undue inflation and deflation of nominal financial bubbles whose unsynchronized expansion and contraction make a bad situation worse.
3. The crisis is rooted in our past sins. For a long time now, we have allowed things to deteriorate: we’ve let the ‘real economy’ weaken, the ‘bubbles of finance’ inflate and the ‘distortions of politics’ pile up; in doing so, we have committed the cardinal sin of undermining the growth of the economy and the accumulation of capital; and since, according to the priests of economics, sinners must pay for their evil deeds, there is no way for us to escape the punishment we justly deserve – the systemic crisis.

Although there are no hard and fast rules here, it is doubtful that this massive punishment can be increased much further without highly destabilizing consequences. With the underlying magma visibly shifting, the shadow of the asymptote cannot be clearer

CRONY CAPITALISM - Insideous, Controlled, Relentless and Stealth Changes

Regulators Weigh Easing of Global Bank Rules 06/15/12 WSJ

International regulators are poised to ease a core element of new banking rules that were designed to improve the safety of the financial system, with some regulators fearing that plowing ahead with the tougher requirements could exacerbate the current European crisis . Among the planned changes, one would allow a wider variety of assets—such as gold and equities—to count toward banks' liquidity buffers, according to people involved in the talks.

a growing number of central bankers and regulators have come to accept industry arguments that in the current environment, it will be nearly impossible for banks to comply with the liquidity rules. Further, they say, forcing them to try could precipitate dangerous cash crunches at some institutions.

The changes are likely to be welcomed by the banking industry and some policy makers. But some outside experts say it could be a mistake to loosen the rules. The rule in question is known as the "liquidity coverage ratio." It will force banks to hold large enough quantities of certain assets, such as cash and government bonds, that would enable banks to weather a theoretical 30-day liquidity crisis. The idea is that some assets are sufficiently liquid that, even in the heat of a crisis, banks will be able to sell them on the market to drum up cash. The rule is supposed to take effect in 2015.

Slobbering Senators Woo Dimon While They Gut Dodd-Frank 06/17/12 Bloomberg

Neither Dodd-Frank nor the Volcker Rule nor bank-capital requirements nor the other regulations that will ultimately get written -- with a lot of help from Wall Street’s lawyers and lobbyists -- will change the behavior of the hundreds of thousands of bankers, traders and executives who work on Wall Street and who do the things every hour of every day that slowly but surely have had a tendency to lead to the collective action that cause financial crises. People are pretty simple: They do what they are rewarded to do. At this very moment on Wall Street, smart, well-educated people are being rewarded to take big risks with other people’s money. Because that’s what they get paid to do -- often in the millions of dollars each year -- it is hardly surprising that they continue to do it. Need some evidence? President Barack Obama signed the 2,300-page Dodd-Frank law nearly two years ago, in July 2010. At the time, with great bravado, he said, “These reforms represent the strongest consumer financial protections in history. In history.”