Goolsbee

The list of public/private institutions that desperately need structural reform is long: the Pentagon, healthcare (a.k.a. sickcare), Social Security, the complex mish-mash of programs that make up the Welfare State, the 73,000 page tax code, public pensions and the financial sector, to name just the top few. Regardless of the need for reform, it isn't going to happen for these structural reasons.

• Obama's Gun Curbs Face a Slog in Congress (BBG)
• Euro Area Seen Stalling as Draghi’s Pessimism Shared (BBG)
• China Begins to Lose Edge as World's Factory Floor (WSJ)
• EU Car Sales Slump (WSJ)
• Fed Concerned About Overheated Markets Amid Record Bond-Buying (BBG)
• Australia Posts Worst Back-to-Back Job Growth Since ’97 (BBG)
• Abe Currency Policy Stokes Gaffe Risk as Amari Roils Yen (BBG)
• Japan Opposition Party Won’t Back BOJ Officials for Governor (BBG)
• Fed Reports Point to Subdued Economic Growth (WSJ)
• China Set to Exit Slowdown by Boosting Infrastructure (BBG)
• Greece not out of woods, must stick to reforms: finance minister (Reuters)
• Russian Rate Debate Flares Up as Cabinet Seeks Growth (BBG)

You've probably noticed the cookie-cutter format of most financial media "news": a few key "buzz words" (fiscal cliff, Bush tax cuts, etc.) are inserted into conventional contexts, and this is passed off as either "reporting" or "commentary" depending on the number of pundits sourced. Correspondent Frank M. kindly passed along a template that is "officially deny its existence" secret within the mainstream media. With this template, you could launch your own financial media channel, ready to compete with the big boys. Heck, you could hire some cheap overseas labor to make a few Skype calls to "the usual suspects," for-hire academics, hedge fund gurus, etc. and actually attribute the fluff to a real person.

As the flow of subsidies from Washington slowly ebbs, the TBTF banks will begin to feed upon one another...

Now that the world is covered in at least $707 trillion in assorted unregulated Over the Counter derivatives (as of June 30, the most recent number is easily tens of trillions greater) and with at least one JPMorgan prop|non-prop trader exposed to having a ~$100 billion notional position in some IG-related index trade, pundits, always eager to score political brownie points, are starting to ruminate over ways to put the half alive/half dead cat back into the box. Unfortunately they are about 20 years too late: with the world literally covered in various levered bets all of which demand hundreds of billions in variation margin on a daily basis, the second the one bank at the nexus of the derivative bubble (ahem JPMorgan) starts keeling over, it will once again be "the end of the world as we know it" unless said bank is immediately bailed out. Again.

Nope, I wasn't drunk.

Time for some more rotation of the titanic's deck chairs with the Princeton labor economist taking over Goolsbee. Unfortunately with Geithner still around, there is no risk America will change its current path heading straight into a Double Dip iceberg.

GEITHNER SAID TO CONSIDER LEAVING TREASURY AFTER BUDGET DEAL

Explains why the market just ripped.

In the meantime, a cubicle at 270 Park is being prepared.

The adventures begin...

In case anyone was wondering why Goolsbee was the latest sacrifice at the altar of public discontent with Obama's economic "policies" here it is: "Americans' disapproval of how President Barack Obama is handling the economy and its growing budget deficit has reached new highs amid broad frustration over the slow pace of economic recovery, according to a Washington Post-ABC New poll released on Tuesday. The ratings Obama's approval rating bounced to 56 immediately after bin Laden was killed last month. Fifty-nine percent, a new high, gave Obama negative marks for his handling of the economy, up from 55 percent a month earlier. Obama's approval rating on the deficit issue hit a new low of 33 percent, down 6 points since April. The state of the economy poses a huge challenge for the president, whose re-election in 2012 may depend on his ability to convince voters that his economic policies have been successful." Unfortunately Goolsbee's departure means that the one sacrificial lamb left in the Obama economic circle (now that Mark Zandi seems a shoo in for at least one position on Obama's staff), Tim Geithner, will be kept in Obama's back pocket until QE 3 (which will come - Obama has nothing else left up his sleeve) proves to be an abysmal failure and be fired once the Fed's balance sheet hits about $4 trillion, roughly $1.3 trillion higher than where it is now.

• Rogoff - The global fallout of a eurozone collapse (FT)
• Europe’s Banks Too Fragile to Afford Greek Default (Bloomberg)
• Geithner Wants Global Rules on Derivatives (WSJ)
• Low Yields on Treasury Debt No Guarantee Financial Crisis Won’t Hit U.S. (Bloomberg)
• Debt crisis and IMF to dominate Obama, Merkel talks (Reuters)
• Lehman Brokerage Gets $2 Billion From Barclays (Bloomberg)
• Obama’s Chief Economist Goolsbee Is Said to Consider Return to Teaching (Bloomberg)
• Hong Kong Banks’ Mortgage Rate Increases Taking Steam Out of Housing Boom (Bloomberg)

• US data chief warns on employment - "Probably the most notable thing about [the jobs report] is there isn’t anything notable about it,” said Keith Hall, commissioner of the Bureau of Labor Statistics (FT)
• Geithner May Support Lagarde for IMF to Keep U.S. Leadership of World Bank (Bloomberg)
• Obama Is Focusing on Tax Incentives, Subsidies to Spur Jobs, Goolsbee Says (Bloomberg)
• Socialists ousted in Portugal election (FT)
• Sino-Forest to provide details of tree ownership (Daily Mail)
• New data suggests Iran military link-UN atom chief (Reuters)
• Rain quenches thirst of areas hit by drought (China Daily)
• Obama nominee withdraws from Fed race (FT, Reuters)
• Thousands protest against Greek austerity (FT)
• Plan Focuses on Rescheduling of Greek Debt (FT)
• Iran to send caretaker oil minister to OPEC (Reuters)

Answer: Morons

As GS summarizes the week ahead in politics, it will be "a somewhat quiet week, with the House on recess and energy legislation on the Senate floor; fiscal debates will continue in the background, with possible action in the Senate on competing budget plans starting later this week…" In other words, the soap opera on the debt limit will soon start getting very interesting.

The manipulation of data in order to spin the economic situation in this country in the best light possible has become so blatant that only the most ignorant could possibly believe it. The corporate mainstream media dutifully reports the propaganda, without ever critically assessing what is being distributed by the government. The percentage of the American working population in the workforce consistently ranged between 66% and 67% from 1998 through 2008. Then, suddenly in 2008, after the economy went in the tank, a couple million Americans found better things to do with their spare time and left the workforce. Anyone with an ounce of brains knows these people gave up and are really unemployed. The percentage of people in the labor force should be 66.5%. Using this 20 year average would add 5.5 million people to the civilian labor force and the unemployment rolls. This exercise in reality gives a real unemployment rate of 12%. The true picture of the American economy is that in 2007 there were 146 million Americans employed, or 63% of the working age population. Today, there are 139.9 million Americans employed, or 58.5% of the working age population. Over this time frame, an additional 7.1 million Americans entered the working age population. In 2007 there were 26.3 million Americans on food stamps, or 8.6% of the US population. Today there are 44.2 million Americans on food stamps, or 14.3% of the US population. To call the current economic disaster a recovery is to practice the art of the Big Lie.