Unemployment

IMF Gets A Warm Welcome In Spain

Despite near record low bond yields, a surging stock market and a leadership proclaiming victory, the people of Spain appear upset at the IMF's appearance in their nation. Around 2,000 people protested in Bilbao today as the IMF (member of the infamous Troika) overturning cars and windows, graffiti-ing "IMF Out!" and held banners saying "Troika Go Home", denouncing economic policies that welcome austerity measures and the introduction of cuts. While Christine Lagarde, who attended, lauds the progress (and demands more); perhaps it is the record unemployment, record suicides, record homelessness, and record loan delinquencies that tarnish the rose-colored glasses that 'the powers that be' would prefer the general public to see the world through.

The Greatest Propaganda Coup Of Our Time?

There’s good propaganda and bad propaganda. Bad propaganda is generally crude, amateurish Judy Miller “mobile weapons lab-type” nonsense that figures that people are so stupid they’ll believe anything that appears in “the paper of record.” Good propaganda, on the other hand, uses factual, sometimes documented material in a coordinated campaign with the other major media to cobble-together a narrative that is credible, but false. The so called Fed’s transcripts, which were released last week, fall into the latter category... But while the conversations between the members are accurately recorded, they don’t tell the gist of the story or provide the context that’s needed to grasp the bigger picture. Instead, they’re used to portray the members of the Fed as affable, well-meaning bunglers who did the best they could in ‘very trying circumstances’. While this is effective propaganda, it’s basically a lie, mainly because it diverts attention from the Fed’s role in crashing the financial system, preventing the remedies that were needed from being implemented (nationalizing the giant Wall Street banks), and coercing Congress into approving gigantic, economy-killing bailouts which shifted trillions of dollars to insolvent financial institutions that should have been euthanized.  What I’m saying is that the Fed’s transcripts are, perhaps, the greatest propaganda coup of our time.

Near-Bankrupt Rome Bailed Out As Italy Unemployment Rises To All Time High, Grows By Most On Record In 2013

A few days ago, we reported that, seemingly out of the blue, the city of Rome was on the verge of a "Detroit-style bankruptcy." " And just as expected, yesterday Rome was bailed out. What is certain is that this year will not be the last one Rome is bailed out either. In fact, it will continue getting rescued for years to come because contrary to the propaganda, the Italian economy continues to get worse with every passing month, yields on Italian bonds notwithstanding. Ansa reports that in January the Italian unemployment rate rose to a record 12.9%, and that "reducing Italy's "shocking" rate of unemployment must be the government's highest priority, Premier Matteo Renzi said Friday." How, by pretending everything is ok, kicking the Roman can and hoping things improve by bailing out anyone that is insolvent? Putting 2013 in perspective, this is the year when according to national statistical agency Istat, some 478,000 jobs were lost in Italy in 2013, the worst year since the global financial crisis of 2008-2009, with an average annual jobless rate of 12.2% last year.

China Strikes Back At US "Human Rights Violations": Slams PRISM Spying, Droning, Gun Violence, Homelessness And Unemployment

Today, China decided to strike back at the US with its own report on US "human rights." In a nutshell, China launches a full frontal attack on the hypocrisy of the US, saying that "posing as "the world judge of human rights," the U.S. government "made arbitrary attacks and irresponsible remarks" on the human rights situation in almost 200 countries and regions again in its just-released reports, the report says. "However, the U.S. carefully concealed and avoided mentioning its own human rights problems," it adds. The report calls the U.S. tapping program, code-named PRISM, which exercises long-term and vast surveillance both at home and abroad, "a blatant violation of international law" and it "seriously infringes on human rights."

Futures Tread Record Territory Water Following Overnight China, Ukraine Fireworks

In addition to the already noted fireworks out of China, where the Yuan saw the biggest daily plunge since 2008 and the ongoing and very rapid newsflow out of the Ukraine, focus this morning was very much of the latest Eurozone CPI data, which despite matching previous low levels, came in above expectations and in turn resulted in an aggressive unwind of short-EUR bets as market participants were forced to re-asses the likelihood of more easing by the ECB. Still, even though the Euribor curve bear steepened and Bunds came under significant selling pressure, the EONIA forward curve remained inverted, signifying that there is still a degree of apprehension over what is unarguably very low inflation data.

Goldman's Post-Mortem Of Yellen's Second Day Of Congressional Testimony

Missed today's follow up Janet Yellen testimony before the Senate Banking Committee? Don't worry: you didn't miss much, all the bases were covered including winter weather during the winter, the Fed's complete cluelessness about what "full employment" means (because the definition changed thoroughly from December 2012 when it was 6.5%), what the "quantitative" definition of quantitive easing is (Yellen has no idea), why the Fed isn't subject to a haircut on its MBS holdings while all the other banks have to suffer under the intolerable Basel III 15% haircut (something to do with illiquidity of MBS, and specifically - something to do with the fact that the Fed has soaked up more than all net issuance of MBS in the past year, but don't worry - the Fed is on top of it), and, of course, Bitcoin. For everything else, here is Goldman's post-mortem of Yellen's Day Two testimony.

Futures Sell Off As Ukraine Situation Re-Escalates

Three unlucky attempts in a row to retake the S&P 500 all time high may have been all we get, at least for now, because the fourth one is shaping up to be rather problematic following events out of the Crimean in the past three hours where the Ukraine situation has gone from bad to worse, and have dragged the all important risk indicator, the USDJPY, below 102.000 once again. As a result, global stock futures have fallen from the European open this morning, with the DAX future well below 9600 to mark levels not seen since last Thursday. Escalated tensions in the Ukraine have raised concerns of the spillover effects to Western Europe and Russia, as a Russian flag is lifted by occupying gunmen in the Crimean (Southern Ukrainian peninsula) parliament, prompting an emergency session of Crimean lawmakers to discuss the fate of the region. This, allied with reports of the mobilisation of Russian jets on the Western border has weighed on risk sentiment, sending the German 10yr yield to July 2013 lows.

The High Price Of Delaying The Default

Credit is a wonderful tool that can help advance the division of labor, thereby increasing productivity and prosperity. The granting of credit enables savers to spread their income over time, as they prefer. By taking out loans, investors can implement productive spending plans that they would be unable to afford using their own resources. The economically beneficial effects of credit can only come about, however, if the underlying credit and monetary system is solidly based on free-market principles. And here is a major problem for today’s economies: the prevailing credit and monetary regime is irreconcilable with the free market system.

Howard Davies On The Banks That Ate The Economy

Bank of England Governor Mark Carney surprised his audience at a conference late last year by speculating that banking assets in London could grow to more than nine times Britain’s GDP by 2050. These may be reasonable assumptions, but the estimate was deeply unsettling to many. Hosting a huge financial center, with outsize domestic banks, can be costly to taxpayers. In Iceland and Ireland, banks outgrew their governments’ ability to support them when needed. The result was disastrous. Quite apart from the potential bailout costs, some argue that financial hypertrophy harms the real economy by syphoning off talent and resources that could better be deployed elsewhere.

Frontrunning: February 25

  • Turkish PM says tapes of talk with son a fabrication (Reuters) but opposition confirms authenticity, and national TV carriers cut parliament when played live
  • Inside the Showdown Atop Pimco, the World's Biggest Bond Firm (WSJ)
  • Ex-Jefferies Trader’s Customers Say Lies Common Tactic (BBG)
  • Bitcoin exchange Mt. Gox disappears in blow to virtual currency (Reuters)
  • The messenger mania is spreading: SoftBank Said to Seek Stake in Naver’s Line Messaging Unit (BBG)
  • Ukraine Replaces Central Bank Head (BBG)
  • Yup, an actual headline: Harsh weather tests optimism over U.S. economy (Reuters)
  • Hiring of Law Grads Improves for Some (BBG)
  • Easy Currency Bet Gets Harder as the Chinese Yuan Tumbles (WSJ)
  • In Ukraine turbulence, a lad from Lviv becomes the toast of Kiev (Reuters)

10 Stories From The Cold, Hard Streets Of America That Will Break Your Heart

If the economy is really "getting better", then why have millions upon millions of formerly middle class Americans been pushed to the point of utter despair?  The stories that you are about to read are absolutely heartbreaking. But if you listen to the mainstream media, you would think that happy days are here again for America.  Just check out some of the bizarre headlines that I have collected in recent weeks... CNBC: "Stop whining! The US economy is in good shape" USA Today: "Economists: U.S. will see better growth in '14" Newsday: "Why the economy isn't doomed" Most Americans will buy into this propaganda and will never see the next major economic crisis coming until it is too late to do anything about it.

JPMorgan To Fire Thousands

Following last year's realization that mortgage origination as a product line is effectively dead (which has forced such origination dependent banks as Wells Fargo to return to subprime lending in hopes of keeping the revenue stream alive, knowing full well how it all ends), and that only investors and "all cash" buyers are keeping the myth of the housing recovery alive on their shoulders, banks fired tens of thousands of workers in the mortgage business hoping to stem the bottom line bleeding from the collapse in revenues. It turns out that they didn't fire enough and/or that the housing market contraction was far worse than even the banks, in their most, pessimistic forecasts, had expected. Case in point: JPMorgan, which after firing 15,000 in its mortgage business, has just revealed it will fire thousands more.

Guest Post: The Dollar And The Deep State

What others describe as the Deep State we term the National Security State which enables the American Empire, a vast structure that incorporates hard and soft power--military, diplomatic, intelligence, finance, commercial, energy, media, higher education--in a system of global domination and influence. One key feature of the Deep State is that it makes decisions behind closed doors and the surface government simply ratifies or approves the decisions. A second key feature is that the Deep State decision-makers have access to an entire world of secret intelligence. What would best serve the Deep State is a dollar that increases in purchasing power and extends the Deep State's power.