The Housing Bubble

Houses are rapidly depreciating asset no different that automobiles.

Any thoughts on for how much longer the Treasury bond rout will last?

Any thoughts on for how much longer the housing bubble will last?

Asia stocks sink as Fed hints at stimulus phaseout
By PAMELA SAMPSON, AP Business Writer
8:35 p.m. Aug. 21, 2013

BANGKOK — Asian stock markets fell Thursday after the Federal Reserve made it known that its top officials were leaning toward phasing out its massive stimulus program.

The Fed released minutes of its July policy meeting Wednesday that showed most members want to slow down the pace of a massive bond-buying program. The U.S. central bank has been purchasing $85 billion of financial assets a month, which was intended to push down interest rates and spur borrowing and growth.

However, U.S. economic data in recent months has been strong enough to stir some Fed officials to call for a winding down of the asset purchases. That has sparked a sell-off in stock markets, which had been pumped up by the low interest rate policy, with some weaker Asian economies such as India and Indonesia particularly hard hit. India’s rupee continued to post fresh record lows, with the dollar buying more than 65 rupees Thursday.

Critics have said the program has raised the risk of igniting inflation by pumping up the money supply and also could create asset bubbles in assets such as stocks.

The Fed minutes didn’t indicate when the “tapering” of purchases might begin, leaving analysts to guess.

“Most analysts still expect tapering to start in September, or at the bare minimum a September announcement and implementation through October and November,” said Stan Shamu, market strategist of IG in Melbourne, Australia.

Japan’s Nikkei 225 index fell 0.2 percent to 13,403.59. Hong Kong’s Hang Seng index dropped 0.7 percent to 21,667.34. South Korea’s Kospi lost 1 percent to 1,849.82. Australia’s S&P/ASX 200 shed 0.6 percent to 5,071.90.
…

How are emerging markets reacting to the prospect of a QE3 taper?

The truth about the real size of the US national debt
Pravda | 08/22/2013 | Yuri Skadanov

Everyone got used to the largest officially announced U.S. national debt of 16 trillion dollars. Moreover, despite the dire predictions, the global economy seems to be more or less stable, and recently liberal media have been happily reporting GDP growth in the United States and the European Union. However, it is not all that great.

Let’s start with statistics. A number of researchers have conducted studies that indicate that the official U.S. statistics in nearly all areas - from unemployment to price fluctuations - is blatantly distorted and paints a positive picture that is very different from the reality.

The work of Professor James Hamilton of the University of Economics, California who analyzed the size of the public debt of the United States particularly stands out. According to official data since 2008, when the global economic crisis commenced, the U.S. national debt has increased from 5 to 16.4 trillion dollars. The debt is repaid by ordinary taxpayers who pay approximately $220 billion annually in interest alone.

This huge sum emerged due to the fact that in an effort to get out of the crisis, the Federal Reserve in coordination with the U.S. authorities pumped money into the economy and bought a lot of assets. Accordingly, the amount of state debt increased every year, and the interest on the debt service alone by 2021 will exceed the costs of defense spending.

Who needs wages when you’ve got equity?

Denver Post - Wage gains missing for most U.S. workers since 2000:

“Workers in the United States and Colorado have suffered a decade of stagnant wages despite continued productivity gains in the economy, according to a report Wednesday from the Economic Policy Institute.

Even though worker productivity has increased 25 percent since 2000, the median weekly wage, after adjusting for inflation, is flat. In Colorado, the inflation-adjusted median hourly wage is down 1.7 percent over that period”

http://www.denverpost.com/ci_23909483?source=bb

I was talking to one of my buddies about the “bored teenagers” who get ansty especially during the summer months, and he reminded me of the old Fresh Air Fund tv commercials I used to see when I wuz a pup. Wow, was that ever a blast from the past!

The point was, however, that we’re being terribly unfair and wasting these “teenagers” by leaving them to languish in their neighborhoods. He proposes to send them to open air camps in places like the Hamptons and Martha’s Vineyard for a couple of weeks each summer to clean up trash and cull the elite herds, so to speak, and meanwhile enjoy the beaches and green spaces and good food.

Denver Post - Fort Collins, Boulder lead real-estate recovery; Colorado Springs lagging:

“In Fort Collins, home prices have increased 21 percent from their lowest point, while in Boulder prices have increased 40 percent from their trough. The U.S. average is 19 percent”

http://www.denverpost.com/recommended/ci_23890624

“No matter how we reform health care, we will keep this promise to the American people. If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.”
–Barack Obama, June 15, 2009

“If you like your health care plan, you can keep your health care plan.”
–Barack Obama, Aug 11, 2009

“Ha ha. Fooled ya.”
–Obamacare Summer 2013

The obesity era: As the American people got fatter, so did marmosets, vervet monkeys and mice. The problem may be bigger than any of us

For the first time in human history, overweight people outnumber the underfed, and obesity is widespread in wealthy and poor nations alike. The diseases that obesity makes more likely — diabetes, heart ailments, strokes, kidney failure — are rising fast across the world, and the World Health Organisation predicts that they will be the leading causes of death in all countries, even the poorest, within a couple of years. What’s more, the long-term illnesses of the overweight are far more expensive to treat than the infections and accidents for which modern health systems were designed. Obesity threatens individuals with long twilight years of sickness, and health-care systems with bankruptcy.

And so the authorities tell us, ever more loudly, that we are fat — disgustingly, world-threateningly fat. We must take ourselves in hand and address our weakness. After all, it’s obvious who is to blame for this frightening global blanket of lipids: it’s us, choosing over and over again, billions of times a day, to eat too much and exercise too little. What else could it be?…

Moral panic about the depravity of the heavy has seeped into many aspects of life, confusing even the erudite. Earlier this month, for example, the American evolutionary psychologist Geoffrey Miller expressed the zeitgeist in this tweet: ‘Dear obese PhD applicants: if you don’t have the willpower to stop eating carbs, you won’t have the willpower to do a dissertation. #truth….

Hand-in-glove with the authorities that promote self-scrutiny are the businesses that sell it…

A report by the consulting firm McKinsey & Co predicted in May 2012 that ‘health and wellness’ would soon become a trillion-dollar global industry. ‘Obesity is expensive in terms of health-care costs,’ it said before adding, with a consultantly chuckle, ‘dealing with it is also a big, fat market.’…

It is undoubtedly true that societies are spending vast amounts of time and money on [the idea that excess body weight and obesity result from individual choices]. It is also true that the masters of the universe in business and government seem attracted to it, perhaps because [they please themselves in believing that what they imagine is their] stern self-discipline [rather than luck or connections] is how many of them attained their status. What we don’t know is whether the theory is actually correct.

…scientists who study the biochemistry of fat and the epidemiologists who track weight trends are not nearly as unanimous as Bloomberg makes out. In fact, many researchers believe that personal gluttony and laziness cannot be the entire explanation for humanity’s global weight gain. Which means, of course, that they think at least some of the official focus on personal conduct is a waste of time and money. [emphasis added] As Richard L Atkinson, Emeritus Professor of Medicine and Nutritional Sciences at the University of Wisconsin and editor of the International Journal of Obesity, put it in 2005: ‘The received wisdom previous belief of many lay people and health professionals that obesity is simply the result of a lack of willpower and an inability to discipline eating habits is no longer defensible.’

Consider, for example, this troublesome fact, reported in 2010 by the biostatistician David B Allison and his co-authors at the University of Alabama in Birmingham: over the past 20 years or more, as the American people were getting fatter, so were America’s marmosets. As were laboratory macaques, chimpanzees, vervet monkeys and mice, as well as domestic dogs, domestic cats, and domestic and feral rats from both rural and urban areas. In fact, the researchers examined records on those eight species and found that average weight for every one had increased.

It isn’t hard to imagine that people who are eating more themselves are giving more to their spoiled pets, or leaving sweeter, fattier garbage for street cats and rodents. But such results don’t explain why the weight gain is also occurring in species that human beings don’t pamper, such as animals in labs, whose diets are strictly controlled. In fact, lab animals’ lives are so precisely watched and measured that the researchers can rule out accidental human influence: records show those creatures gained weight over decades without any significant change in their diet or activities. [emphasis added] Obviously, if animals are getting heavier along with us, it can’t just be that they’re eating more Snickers bars and driving to work most days. On the contrary, the trend suggests some widely shared cause, beyond the control of individuals, which is contributing to obesity across many species.

To make sense of all the data and all the findings, the popular, simple-minded thermodynamic theory must appeal to a multitude of indirect effects. Some researchers are coming to believe that ‘all calories are not equal.’ Some foods alter the biochemistry of fat storing and fat burning. This is a paradigm shift. If a food’s chemistry tilts you toward weight gain, then the problem may be whether you consume it at all, rather than how much you consume.

There are factors other than food that influence the body’s fat metabolism. Poor sleep and stress are known to change the workings of leptin, a hormone that tells the body it has had enough to eat. Infective agents, industrial chemicals, artificial lighting, air-conditioning and heating are all being researching as causes of obesity. “The line of reasoning is not that stress causes you to eat more, but rather that it causes you to gain weight by directly altering the activities of your cells. If some or all of these factors are indeed contributing to the worldwide fattening trend, then the thermodynamic model is wrong.”

E.g.: “A study by Laura Fonken and colleagues at the Ohio State University in Columbus, published in 2010 in the Proceedings of the National Academy of Sciences, reported that mice exposed to extra light (experiencing either no dark at all or a sort of semidarkness instead of total night) put on nearly 50 per cent more weight than mice fed the same diet who lived on a normal night-day cycle of alternating light and dark”

E.g.: “A virus called Ad-36, known for causing eye and respiratory infections in people, also has the curious property of causing weight gain in chickens, rats, mice and monkeys. Of course, it would be unethical to test for this effect on humans, but it is now known that antibodies to the virus are found in a much higher percentage of obese people than in people of normal weight.”

Jonathan C. K. Wells makes a “claim that individual choice drives worldwide weight gain is an illusion — like the illusion that individuals can captain their fates independent of history. In reality, Tolstoy wrote at the end of War and Peace (1869), we are moved by social forces we do not perceive, just as the Earth moves through space, driven by physical forces we do not feel. Such is the tenor of Wells’s explanation for modern obesity. Its root cause, he proposed last year in the American Journal of Human Biology, is nothing less than the history of capitalism.”

If … there is more to obesity than simple thermodynamics, some of the billions spent on individual-centred policies and products may be being wasted….Today’s priests of obesity prevention proclaim with confidence and authority that they have the answer. So did Bruno Bettelheim in the 1950s, when he blamed autism on mothers with cold personalities. So, for that matter, did the clerics of 18th-century Lisbon, who blamed earthquakes on people’s sinful ways. History is not kind to authorities whose mistaken dogmas cause unnecessary suffering and pointless effort, while ignoring the real causes of trouble. And the history of the obesity era has yet to be written.

Wall Street Journal - On the Killing Floor, Clues to the Impact of Immigration on Jobs:

“Greeley, Colo.– Here on the outskirts of town sits a sprawling meatpacking plant where more than 3,000 workers slaughter and process thousands of cows a week — and where English is hardly the only language spoken inside. Indeed, the union handbook is printed in English, Spanish, Burmese and Somali.

Since the meatpacking plant was built in Greeley in the 1950s, the northeastern Colorado city has lured immigrants. The population blossomed to more than 90,000 in 2010, 36% of whom were Hispanic, most of them from Mexico. Twenty years earlier, the town had 60,500 residents, 20% of them Hispanic.

Now the area has about 2,000 refugees, too — the “new Mexicans,” as some in the meatpacking business called them. Asad Abdi, a refugee who got his start at the meatpacking plant in Greeley, opened a Global Refugee Center in 2008 to help immigrants learn English, find housing and jobs and apply for government benefits.

http://online.wsj.com/article/SB10001424127887324251504578580041922193264.html

Suicide Pact: How to cripple your state in five easy steps.
National Review | 08/22/2013 | Kevin D. Williamson

1. Make work expensive. The nine states with the highest personal-income-tax rates lost $100 billion in AGI from 1995 to 2010. The nine states without any personal-income tax gained $146 billion. In all, some $2 trillion has moved between the states during the years for which Brown has data, and the pattern consistently favors low-tax jurisdictions.

These trends also hold true within states. It is no surprise that New York County (Manhattan) has lost AGI to nearby suburban areas such as Westchester County, N.Y., and Fairfield County, Conn., or that Philadelphia, which imposes a city income tax, has lost people and income to nearby suburban counties. But that doesn’t mean that these states are keeping it in the family: New York State has lost $68 billion in AGI, with Florida claiming the biggest piece and North Carolina in the No. 4 spot. Pennsylvania is getting beat out by (in order of magnitude) Florida, North Carolina, South Carolina, Virginia, and Arizona.

2. Attack lifetime savings. Florida is a good place to live and a great place to die. Its lack of a personal income tax is attractive, and so is its lack of an estate tax. By way of contrast, Minnesota imposes a significant estate tax, one that is more rapacious than the federal levy: Whereas the federal tax excludes $5.25 million per person, Minnesota excludes only $1 million. And if you try to give away some of your assets before you kick off, Minnesota imposes its own gift tax, too, at 10 percent. Minnesota lost nearly $4 billion in AGI from 1992, with the largest amounts going to Florida, Arizona, Wisconsin (which recently eliminated its estate tax), Texas, and Colorado.

3. Run up your state’s long-term liabilities. That means fat pensions for unionized state employees funded mostly by hopes and dreams and fairy dust. The states with the most serious unfunded-liability problems are basically ebola-infected hot zones for mobile capital and income. People in Detroit have known for a long time that the city’s 100,000 or so creditors were eventually going to come around looking to get paid, and nobody wanted to hang around to get stuck with the bill, which is one of the reasons why Wayne County has lost $9.57 billion in AGI. Michigan as a whole has lost $16.8 billion, with the largest share of it going to — stop me if this sounds familiar — Florida, Arizona, and Texas. Illinois is down $29.3 billion, and California is down a shocking $45.3 billion, with its incompetent leaders due thank-you notes from Nevada, Arizona, Oregon, Texas, and Washington. Within California, Los Angeles County — the Detroit of the West Coast — is down $36.4 billion.

4. Tax fanciful things. Maryland is the innovation leader here, with the ingenious leadership of Governor Martin O’Malley having decided to levy a tax on rain. Already down $7 billion in AGI largely ceded to Florida, North Carolina, and Virginia, Maryland has declared war on economic development, with its rain tax levying charges on every square inch of impervious surface — rooftops, parking lots, driveways — that will produce runoff in the event of rain. It’s harder to take business away from Maryland, because so much of its economy is based on its proximity to the hog trough in Washington, D.C., but it lost out to Virginia in its bid to secure the world headquarters for Northrop Grumman in 2010, and Virginia has made a play for Maryland’s biggest business, Lockheed Martin.

5. Don’t just be crazy — be California crazy. California is running out of things in the present to tax, and its future does not look terribly bright, so it has resorted to taxing the past. A combination of judicial shenanigans and legislative incompetence resulted in California’s reneging on tax incentives that had been offered to some businesses — and then demanding the retroactive payment of taxes for which businesses had never been legally liable. Small-business owners, some of whom had sold their businesses years ago, suddenly got demands for taxes running well into the six figures. And, California being California, it had the gall to charge those businesses interest on taxes they had never owed. Jim Fowler, a software entrepreneur, was hit with a bill for more than $600,000. “I think that’s the part that’s really going to ruin trust in the state of California,” he said. “You can’t do this to entrepreneurs. Entrepreneurs will stop coming here.”

Wall Street Journal - Bradley Manning Seeks Gender Change:

“Pfc. Bradley Manning said Thursday that he wants to live his life as a woman and be known as Chelsea Manning as he begins a 35-year prison term for leaking information to Wikileaks.

Less than 24 hours after being sentenced for being the source of one of the biggest classified leaks in U.S. history, Pfc. Manning said he wants to begin hormone therapy and be known by a new name.

“As I transition to the next phase of my life, I want everyone to know the real me,” he said in a statement made on NBC’s “Today Show” by his attorney, David Coombs. “I am Chelsea Manning.”

U.S. Home Sales Hit 5.39M in July, Highest Since ’09

Read more: http://business.time.com/2013/08/21/u-s-home-sales-hit-5-39m-in-july-highest-since-09/#ixzz2chto1cefhttp://business.time.com/2013/08/21/u-s-home-sales-hit-5-39m-in-july-highest-since-09/

(excerpt)

U.S. sales of previously occupied homes surged in July to a seasonally adjusted annual rate of 5.39 million, approaching a healthy level for the first time since November 2009. The spike in sales shows housing remains a driving force for the economy even as mortgage rates rise.

The National Association of Realtors said Wednesday that sales jumped 6.5 percent last month from a 5.06 million pace in June. They have risen 17.2 percent over the past 12 months ago.

Sales have now stayed above an annual pace of 5 million for three straight months. The last time that happened was in 2007. And sales are well above the 3.45 million pace hit in July 2010, the low point after the housing bubble burst.

Read more: http://business.time.com/2013/08/21/u-s-home-sales-hit-5-39m-in-july-highest-since-09/#ixzz2chtrxhhK

Hope and Change

Wall Street Journal - Zimbabwe’s Robert Mugabe Sworn In for Another Five Years:

“After demolishing his rival and surviving a court challenge to his re-election, 89-year-old Robert Mugabe was sworn in as president of Zimbabwe on Thursday, vowing to fulfill a campaign promise of transferring more corporate wealth to the black citizens of the southern African nation.”

Mugabephones for all!

Forward

Better not tell Obama about this or he’ll go there and eat them all!

“As many as 50,000 stray dogs roam the streets and vacant homes of bankrupt Detroit, replacing residents, menacing humans who remain and overwhelming the city’s ability to find them homes or peaceful deaths.”

http://www.bloomberg.com/news/2013-08-21/abandoned-dogs-roam-detroit-in-packs-as-humans-dwindle.html

Forward

Feeble Middle Class “Recovery,” But House Prices Continue To Rise
Confounded Interest | 08/222013 | Anthony B. Sanders

It has been a tough recovery for Americans, particularly for the middle class.

Median household income is down 4.4% since the end of the recession in June 2009.

Initial jobless claims rose to 336,000 in the most recent reading. And is above the level when interest rates started rising on May 1st.

Unemployment in the 16-19 year old segment is a Greek-like 23.70%, putting a crimp in the savings ability of America’s youth.

And the American Healthcare Act imposes a massive increase in healthcare costs on young men.

7 out of 10 jobs created since January 2009 have been part-time jobs, not full-time jobs.

The FHFA Purchase only index rose 0.7% in June, despite rising mortgage rates. Thank investors for that increase!

So you can now see why Wells Fargo is laying off so many people in the loan production group.

Yes we can!

http://www.theguardian.com/commentisfree/2013/aug/22/democrat-disgusted-with-president-obama1

Has Mr Market become indifferent to massive trading glitches?

Bulletin
Get news bulletins by email » Trading of Nasdaq-listed stocks, options halted

$5.7 trillion locked up by Nasdaq trading halt
August 22, 2013, 1:33 PM

Nasdaq’s unexplained trading halt Thursday locked up trading in stocks with a total market capitalization of $5.7 trillion.

The extraordinary halt in the trading of more than 2,000 issues, came after an as yet undisclosed technical glitch.
…

If you look at what’s happening today, all of the major asset classes are up in the United States. Stocks are up, interest rates are up, gold is up, the dollar is up, and real estate is up.

How is that even possible?

What conspiracies?

http://m.vice.com/en_uk/read/larry-summers-and-the-secret-end-game-memo

“…in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet.”

Met Reptile Gov. Bobby Jindal’s brother today at a CLE lunch event. Seems like a cool, laid back bro. If he wasn’t indian he would perfectly fit the stereotype of a frat bro.

http://www.gibsondunn.com/lawyers/njindal

I didn’t get a chance to talk to him, it wasn’t that sort of event.

Reminder: The next mayor of NYC is either going to be a lesbian (Quinn) or a uber liberal white man who is married to an african american lesbian (Di Blasio)*.

http://en.wikipedia.org/wiki/Chirlane_McCray = DiBlasio’s wife. She came out as a lesbian back in the 90s by writing an article in Essence Magazine. She’s still lesbian but DiBlasio explains “my wife hates labels”.

WTF?

http://www.zerohedge.com/news/2013-08-22/icahn-tweets-aapl-rescue-orders

Bravo, sir! Bravo!