The Housing Bubble

Sherman Antitrust Act
From Wikipedia, the free encyclopedia
Sen. John Sherman (R—OH), the principal author of the Sherman Antitrust Act.

The Sherman Antitrust Act (Sherman Act,[1] 26 Stat. 209, 15 U.S.C. §§ 1–7) is a landmark federal statute in the history of United States antitrust law (or “competition law”) passed by Congress in 1890. It prohibits certain business activities that federal government regulators deem to be anti-competitive, and requires the federal government to investigate and pursue trusts.

It has since, more broadly, been used to oppose the combination of entities that could potentially harm competition, such as monopolies or cartels.
…

First test case was Standard Oil, AKA ESSO, AKA Exxon IIRC.

It has since, more broadly, been used to oppose the combination of entities that could potentially harm competition, such as monopolies or cartels.

You mean like our local Energy, Cable or even our land line telephone companies.

Got ya

Apparently it is just fine to break up oil companies, airlines, and telephone and telegraph firms.

If the large Wall Street banks are ever broken up to end their oligopolistic influence on the U.S. economy, all the children will die as a result.

Buttstimates™

How is it any different than how a great many IT people got their start?

There’s plenty of older IT people out there without degrees.

Call it luck and fortunate timing.

“…luck and fortunate timing.”

It can’t hurt to have the luck of birth into a wealthy family who can cover your back while you take entrepreneurial risk.

There’s that, but that doesn’t happen often.

Your place in the demographic scheme of things matters much more to the outcome of groups of average individuals, including average, run-of-the-mill IT workers (which accounts for the vast majority of IT workers).

Point taken (average starting point is the largest driver of average outcome).

In the overall scheme of things, his comments are just self-aggrandizing embellishments, compared to the reeking lies he’s read from the teleprompter over the years (about housing, the economy, the banks, medical reports, US military actions, illegal immigration, etc.)

I think his real sin was summed up best by one of his associates:

“One longtime NBC employee who has worked with Williams on several occasions had a few dirty words to describe the celebrated anchor, calling him a “real pompous piece of s–t.”
“He’s an a–hole,” he fumed. “He’s not a journalist. He’s a reader.”

http://pagesix.com/2015/02/05/tom-brokaw-wants-brian-williams-fired/

He’s very proud of his daughter doing soft-core porn shots on HBO.

http://www.breitbart.com/big-hollywood/2015/01/12/brian-williams-weighs-in-on-daughters-televised-analingus-no-animals-were-harmed/

But, the problem that Williams presents for NBC is an interesting one. NBC is a very powerful mouthpiece for the corporate state. It sells wars and bubbles and globalism and stuff like that. Williams is the face of much of that salesmanship and he is key to selling the lies. TPTB may feel that he has to go because “if they don’t believe Brian, they won’t believe our lies”.

That’s why they call it a “con” game, it’s all about confidence in the “con” man. If the confidence isn’t there, the “con” man is not successful.

I’m glad you brought this up:

‘NBC anchor Brian Williams just makes stuff up, and the world is shocked – but, then again, if you’ve been a regular reader of Antiwar.com, you already knew what a liar he is.’

‘The Twitteratti are in a tizzy over Williams’ blatant fibbery: he’s been telling the same story for years, all about how he was in a helicopter over Iraq that came under attack and he feared for his life. “I was in a place I had no business being,” he said the other day, reiterating the lie and even embellishing it. This was too much for those soldiers who had actually been there, and they quickly debunked his tall tale: Stars and Stripes got a hold of it, and Williams was soon issuing groveling-yet-incomplete apologies, claiming he’d “misremembered” the incident. The Twitter mob then descended – but what are they complaining about? After all, this is the very least of the lies Williams has told on air – and, as far as I’m concerned, the least egregious.’

‘Way back in 2007, I pointed out the pernicious role Williams played in the run-up to the Iraq war, loyally echoing the War Party’s triumphalist nonsense. Citing Howard Kurtz’s 2007 book, Reality Show: Inside the Last Great Television News War, I pointed out in this space that Williams was a reliable foot soldier in the neocons’ war on truth. As Kurtz put it:

“For [Brian] Williams, it all went back to 9/11. As a citizen, he had thought on that fateful day, thank God that Dick Cheney and Donald Rumsfeld and Colin Powell were on this team. How together we all seemed. In Williams’s view, there was something about the murderous attacks on the World Trade Center and the Pentagon that, in the eyes of the White House press corps, gave Bush a stature that could not be violated.”

‘Williams, said Kurtz, doesn’t “enjoy looking back on the run-up to war,” perhaps because he realizes his own key role in making the whole disaster possible. Now there’s a clue as to what motivated him to “misremember” made-up fantasies of personal heroism. It’s all part of the same cover-up: layers of glamorous lies to hide the prosaic reality.’

“-no-animals-were-harmed/”

So where’s the problem?

Allison also told Entertainment Weekly about the elaborate preparations for the simulated sex act, which reportedly involved Spanx, menstrual pads, and “two of those weird thongs.”

“It’s total TV magic,” she said.

I really have no dog in this fight; don’t ever, ever watch network TV news, so barely even know who Brian Williams is. However, it seems his daughter is an over-the-top, out-of-control exhibitionist. And the above tidbit is unbelievably gross.

P.S. If my daughter ever did anything like that, I would die of embarrassment. Apparently some people know no shame.

Heh, I agree. But in Brian’s world, I guess it’s great that his daughter has a gig, any gig. What else is she gonna do? I’m sure he’s most grateful to Lena Dunham for employing her.

Meh, is it any wonder young men are turned off by young women these days? Dunham is just gross and unattractive. Not exactly a role model. Must have been a real feather in her cap to get Williams’ daughter to degrade herself in such a public fashion.

“What else is she gonna do?”

I guess simulated sex on TV beats the hell out of prostitution.

P.S. If my daughter ever did anything like that, I would die of embarrassment. Apparently some people know no shame.

The difference is you rent, but Williams “owns” his homes.

De gustibus non est disputandum.

P Bear, how old fashioned can you be? I know you are not 90. She’s got an acting gig and that’s terrific.

My son has to do a partially nude scene for his college play. I’m proud of him that he is taking it with a grain of salt, part of the job. My bible thumper father in law is so embarrassed that’s he’s not going to go.

I asked pops in law if he would be ashamed to watch my son play Hitler in a movie for Spieberg. He said that’s different. I guess he’s thinking it’s better to play a mass murderer like Hitler than play a regular person who does a normal act.(having sex)

“If my daughter ever did anything like that…”

Mania is a possibility. It leaves one without insight.

It’s hereditary.

Desperation is another possibility. But I have a hard time seeing that as an explanation for a millionaire’s daughter’s public behavior.

My guess is the environment she was raised in was pretty warped. You have these people like Brian Williams who give the appearance of being the very soul of society, but behind that facade of money and stature, things are usually pretty depraved. Trust me, being raised on the fringes of society in the NY/Southern New England area, I saw and heard some things that would raise the hairs on the back of your neck.

I understand your point.

Skakel sounds off on his case
Daniel Tepfer
Published 9:59 pm, Friday, December 12, 2014
Michael Skakel in Stamford, Conn., Superior Court on Friday, Aug. 8, 2014. Photo: Bob Luckey / Greenwich Time

Michael Skakel is a very angry man.

Sitting outside the State’s Attorney’s office in Bridgeport on Friday afternoon the Kennedy cousin, accused of the 1975 murder of Martha Moxley of Greenwich, motioned at the glass partition with a left arm that has a GPS device strapped to it.

“Those people in there, they are terrorists,” he said. “If it’s the last thing I do (former inspector) Frank Garr is going to go to prison and (former state’s attorney John) Benedict, too. They are the real criminals.”

In 2002, Skakel, now 54, was convicted of beating Moxley to death with a golf club in their Belle Haven neighborhood the night before Halloween. Both were 15 at the time.

But in 2013, he was granted a new trial after a judge ruled that Skakel’s trial lawyer, Michael Sherman, had been ineffective. Skakel blamed his 2002 conviction on Sherman, claiming his lawyer was distracted by fame and back taxes he owed the government.

Skakel is free on $1.2 million bond while state prosecutors appeal that decision to the state Supreme Court.

Wearing a black fleece pullover with a vodka brand’s insignia on its chest area, Skakel fumed as he waited for his lawyer to finish inside the office.

“You should be writing the truth,” he said. “The prosecutors here are the criminals, they concealed evidence. They call this the Constitution State, don’t they?

“They had evidence that other people could have committed this crime, Ken Littleton (Skakel’s tutor at the time), but they did nothing about it. Now that’s the real crime.”

Littleton, who was spending his first night in the Skakel home on the night of the murder, was considered an early suspect in the crime and questioned by police.

He was granted immunity in the Moxley murder in 1998 in exchange for testifying before the grand jury that later indicted Skakel.

Garr, who headed the investigation into Moxley’s death that led to Skakel’s arrest, and Benedict who successfully prosecuted for the crime, have since retired and were not available for comment.

State’s Attorney John Smriga, who is now in charge of the case, declined comment on Skakel’s statements.

Skakel and his lawyer, Stephan Seeger, were at the prosecutor’s office on Main Street to get back items that had been seized as part of the investigation.

In 1997, Skakel hired Massachusetts author Richard Hoffman to help ghostwrite his memoir, tentatively titled “Dead Man Talking: A Kennedy Cousin Comes Clean.”

The audio tapes of their conversations — in which Skakel described masturbating in a tree outside the Moxley home the night before she was found beaten to death — would later play a key role in the prosecution of Skakel.

In 1998, Garr seized the tapes along with family photographs and letters Skakel had given Hoffman. The photographs and letters were never put into evidence during the trial and a judge later granted a motion by Seeger to have them returned to Skakel.

Skakel has claimed Garr unlawfully obtained the items from Hoffman, a position he continued to maintain Friday, but much more angrily.

“Those are my things,” Skakel loudly complained as Seeger and a state inspector began going through the items on the other side of the partition. “They (prosecutors) had no right to them. Why don’t you write the truth about what’s going on,” he complained, as two unidentified male companions smiled. “Write the truth,” Skakel repeated.

A few minutes later Skakel and Seeger left with the items.

Seeger was in another room during Skakel’s statements. When reached by email later, Seeger wrote that he “wasn’t present to hear” what was “ascribed to my client.”

But he did acknowledge that a frustrated Skakel might have “blew off some steam.”

“I believe that much gets lost in the heat of the moment,” he wrote. “My client never said people behind the glass of the State’s Attorney’s office were terrorists, and any such statement is taken out of context. The same for statements about Inspector Garr, and Attorney Benedict.”

“Clearly though, there are strong feelings shared by my client and his family about the manner in which certain personal belongings were kept unnecessarily by the State for this many years,” he said in the email.
…

“P Bear, how old fashioned can you be? I know you are not 90. She’s got an acting gig and that’s terrific.

My son has to do a partially nude scene for his college play. I’m proud of him that he is taking it with a grain of salt, part of the job. My bible thumper father in law is so embarrassed that’s he’s not going to go.

I asked pops in law if he would be ashamed to watch my son play Hitler in a movie for Spieberg. He said that’s different. I guess he’s thinking it’s better to play a mass murderer like Hitler than play a regular person who does a normal act.(having sex)”

Partially nude? You mean like taking his shirt off? Or full frontal? Baring his cheeks?

I would suggest that having someone st

“My son has to do a partially nude scene for his college play. I’m proud of him that he is taking it with a grain of salt, part of the job.”

Hopefully simulated analingus is not part of the gig.

“Hopefully simulated analingus is not part of the gig.”

That’s what I was going to say before I cut myself off by premature posting, lol. But it’s nice to know there are parents who take pride in their children baring themselves, especially in a college play. And the moral relativism re Hitler is a nice touch, too.

Colonel Angus’s brother? (It’s a Will Ferrell SNL skit)

Taking a dump is a normal act, too, but I’d rather watch Schindler’s List for an hour or two than a bunch of folks perched on the porcelain throne. But that’s just me.

“P.S. If my daughter ever did anything like that, I would die of embarrassment. Apparently some people know no shame.”

You’ll never make it as a skydiver.

Well I suspect you don’t know. Community college is usually two years and then you transfer to a 4 year college. This is the route many who don’t have a lot of money take, or at least did take back in the day. So, it’s just as likely he did 2 1/2 or 3 years and wasn’t cutting it in the big leagues or needed to work to feed himself, or his family, or something. Whatever, I am not going to look up the liar’s bio.

BTW, I was already married in college, and I had to work like heck to pay the rent and groceries. It’s not easy staying out of the debt donkey corral.

what color is he?

I suspect that when he open his mouth, it is pink.

And… HE’S OUT!

http://www.hollywoodreporter.com/news/brian-williams-stepping-away-nbc-771102

Yes, Brian’s gonna step away from the teleprompter “temporarily”, “to sort things out”. Lol, he says he’ll be back, but I doubt it.

Does my heart good seeing a presstitute like him get the baying hounds treatment that the media likes to dish out to others, some of whom don’t deserve it.

RIP Rocket man.

“And… HE’S OUT!”

That didn’t take long. Whew!

Not to mention the bets placed on Chinese fakes and pages of faces.

Ben -

Any recent news on derivatives and how the US taxpayer now is on the hook for defaults, etc.? Something to keep an eye on…

(Sorry to toss the question to you here, but at the current time, it seemed the best place to ask).

Recession; incredible prosperity. Which is it?

recession, without a doubt.

And if it’s not recession, why can’t they disengage?

exactly. they know what happens next.

Yet the government still owns the mortgage market. Why can’t they disengage?

they think high home prices helps them. what they’re too economically illiterate to understand is that if they stay out of the markets completely, they’d be bringing in much more revenue now. of course they will never believe that. never. they operate on a hope and a prayer.

We can see it’s not even things that are overpriced, but concepts.

yes

Why we’ve even placed billions of dollars of ‘value’ on illegal taxi rides and over-night beds.

lobbyists and regulatory capture.

“Yet the government still owns the mortgage market. Why can’t they disengage?

they think high home prices helps them. what they’re too economically illiterate to understand is that if they stay out of the markets completely, they’d be bringing in much more revenue now.”

The government operates at a net loss. In order to expand in size and scope, it must siphon wealth out of the economy. If it fails at this mission (siphoning wealth), it must downsize. There is no other option.

Now that it owns most of the housing market, that is precisely how it views housing - as a means to its future “viability”.

Staying out of the marketplace is something few in government are ever interested in pursuing. Most know that staying out would generate much more revenue, but staying out also means less opportunity for social engineering.

That government chooses to siphon wealth rather than get out of the way only serves to illustrate the lack of ethics and morals that dominates Washington.

Staying out of the marketplace is something few in government are ever interested in pursuing.

true.

Most know that staying out would generate much more revenue

no, i’ve listened to them talk. they are clueless. not just about economics, but seemingly everything.

staying out also means less opportunity for social engineering.

no, it means more opportunity. social engineering is expensive. they’ll always want more revenue. they already spend more than they take in.

I wonder what happened to wages during the “tulip mania”. Here wages are not increasing but all assets are in a bubble.

‘news on derivatives and how the US taxpayer now is on the hook for defaults’

I wish I had more time to dig into what’s going on. This slipped out last month:

‘NEW YORK, Jan 16 (IFR) - Investors including US mortgage giant Fannie Mae holding decade-old residential mortgage bonds are fretting over potentially huge losses on securities where delayed foreclosures could lead to complete write-offs on defaulted loans.’

‘Mortgage servicers, whose job is to ensure bondholders receive repayments on loans, have frequently failed to foreclose on delinquent debt in a timely manner, and therefore risk falling foul of legal deadlines which limit the time home-owners can be chased for payment.’

“If a foreclosure runs afoul of the statute of limitations, it’s a problem,” said Bruce Bergman, a partner at Berkman Henoch Peterson Peddy & Fenchel, a New York law firm which represents lenders and loan servicing firms in mortgage foreclosure cases. “If the court says the mortgage is gone because too much time has passed, it’s gone. The loss, if it occurs, is catastrophic because it is complete.”

‘Analysts are struggling to estimate the size of resulting losses in the US$820bn of private label RMBS sold before the financial crisis, and investors are just waking up to how big a problem it could become.’

‘Fannie Mae’s general counsel held a conference call just before the Christmas holidays - all of its retained law firms were required to participate - to ask how the government-run mortgage agency could alleviate such losses, a person with knowledge of the call told IFR.’

“[Fannie Mae's] general counsel asked: ‘How bad is it?’” the person said, adding that one of the lawyers on the call answered: “We can’t even begin to tell you - there are so many loans.”

The more I think about it, this is a bizarre report. It comes out around the holidays, and despite the implications, is completely ignored by the media. It just gets a little web run-around in the background. So why mention it? Is it a CYA piece so they can say they weren’t hiding it? I don’t know. The US government never pays back what it owes. If the government gets stuck with these losses, it is just thrown on the pile.

I really believe they tax us just for appearances or to keep us poorer. They don’t need our money. They create as much as they like.

Here wages are not increasing but all assets are in a bubble.

a symptom of a declining economy.

The US government never pays back what it owes.

yes, you’d have to go back many years to find such a case.

If the government gets stuck with these losses, it is just thrown on the pile.

either the pile that we are on the hook for, or the ignored pile.

I really believe they tax us just for appearances or to keep us poorer.

they tax us for their grandiose plans. and so they can live and rule above us.

They don’t need our money.

actually, they do. and we are going to see more and more examples of outright theft by government on its citizens.

They create as much as they like.

really they can’t. but they certainly can spend nearly as much as they like on CREDIT. again, we are on the hook for their actions..

TJ:

Most know that staying out would generate much more revenue

no, i’ve listened to them talk. they are clueless. not just about economics, but seemingly everything.

HERE >> Perhaps you’re correct, but it’s hard to believe that elected officials are really that dumb.

staying out also means less opportunity for social engineering.

no, it means more opportunity. social engineering is expensive. they’ll always want more revenue. they already spend more than they take in.

HERE >> I disagree. Social engineering might be expensive, but it works less effectively if the population at large is increasingly wealthy. Increased wealth = decreased dependency/perceived need.

I don’t know how it ends. But in 2005, the total obligations were mathematically impossible to repay. I think it’s up 50% from then.

“Is the United States Bankrupt?”

Warning! PDF.

http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf

Perhaps you’re correct, but it’s hard to believe that elected officials are really that dumb.

a congressman named ‘johnson’ once said that if everyone stood on the same side of the island guam, that it would capsize.

is that dumb enough?

Social engineering might be expensive, but it works less effectively if the population at large is increasingly wealthy.

it doesn’t work at all if you don’t have the money to do it.

Increased wealth = decreased dependency/perceived need.

yes, but it never stops the social engineers from trying.

“The government operates at a net loss. In order to expand in size and scope, it must siphon wealth out of the economy. If it fails at this mission (siphoning wealth), it must downsize. There is no other option.”

Also don’t forget that honest taxation has been unacceptable ever since Ronald Raygun demonized it. Hence the gubmint resorts to back door taxation schemes to fund its operations, like global warming taxes, taxes on overpriced housing and other real estate assets, and the money press.

ZeroHedge has a great piece on this issue today, Debt in the Time of Wall Street. An interesting analysis of global debt and how so many countries are affected. China’s problem dwarfs that of Greece, for example.

http://www.zerohedge.com/news/2015-02-07/debt-time-wall-street

I think we have to remember that this only comes about because of agreements. If more and more countries decide not to agree with the global banking system, it’s gone.

“The Fed is fast running out of excuses,” Peter Boockvar, chief market analyst at The Lindsey Group, titled a note he sent after the data release. “The Fed’s game of rationalizing zero interest rates has no touch with reality.”

When has that ever stopped them?

Global Debt Nears $200 TRILLION

by Kit Daniels | Infowars.com | February 6, 2015

Government, corporate and household debt have exploded at least 47 countries and “all major economies today have higher levels of borrowing relative to GDP than they did in 2007,” according to a report by McKinsey & Company.

“After the 2008 financial crisis and the longest and deepest global recession since World War II, it was widely expected that the world’s economies would deleverage. It has not happened,” the report stated. “Instead, debt continues to grow in nearly all countries, in both absolute terms and relative to GDP.”

The report house that 80% of all countries have higher household debt, government debt is up $25 trillion since the Great Recession and China’s debt has quadrupled in the past eight years.

And to really drive home the danger, here is a list of the top five banks in the U.S., comparing their total assets versus the exposure each bank holds in derivatives (Third Quarter 2014, Office of the Comptroller of the Currency):

Citibank

Total Assets: $1,377,620,000,000 ($1.4 trillion)

Exposure to Derivatives: $70,254,978,000,000 ($70.3 trillion)

JP Morgan Chase

Total Assets: $2,008,808,000,000 ($2 trillion)

Exposure to Derivatives: $65,307,835,000,000 ($65.3 trillion)

Goldman Sachs

Total Assets: $111,758,000,000 ($111.8 billion)

Exposure to Derivatives: $48,694,949,000,000 ($48.7 trillion)

Bank of America

Total Assets: $1,524,575,000,000 ($1.5 trillion)

Exposure to Derivatives: $37,505,160,000,000 ($37.5 trillion)

Wells Fargo

Total Assets: $1,482,815,000,000 ($1.5 trillion)

Exposure to Derivatives: $5,145,161,000,000 ($5.1 trillion)

Are traders about to go bearish on Treasurys over fears the Fed will follow through on its rate-hike plans in the face of a strengthening U.S. economy and, particularly, ever-stronger labor market conditions?

ft dot com
Global Market Overview
Last updated: February 6, 2015 9:12 pm
US yields rise as jobs data fuel rate tal
Dave Shellock

Friday 21:00 GMT. Treasury bond prices and gold tumbled while the dollar jumped as the chances of the Federal Reserve raising interest rates by the middle of the year appeared to increase after a robust non-farm payrolls report.

US stocks initially rose but could not maintain their momentum — even as Brent oil secured its biggest weekly gain in four years — as Wall Street kept a wary eye on Greek developments.

US employers created 257,000 jobs last month, easily beating forecasts, while the November and December readings were revised upwards. Payrolls have now risen by more than 200,000 for 11 successive months, and — crucially — signs of wage inflation have begun to emerge.

Average hourly earnings rose 0.5 per cent in January, after a modest contraction at the end of last year, taking annual wage growth to 2.2 per cent, the most in five months. A rise in the jobless rate from 5.6 per cent to 5.7 per cent was explained by a rise in the number of people seeking work.

“Overall the combination of better wage growth and continued solid growth in employment should give the Fed more confidence the labour market is improving,” said Signe Roed-Frederiksen, senior analyst at Danske Bank.

“Given the current extremely low level of interest rates, we stick to our call that the Fed will deliver the first hike in June this year, but expect the pace of hikes to be slow initially. Risks are skewed towards a later hike — July or September — as low core inflation gives the Fed time to wait and see .”
…

NOBODY COULD HAVE SEEN IT COMING!

BOND REPORT: 10-year Treasury Yields See Largest Weekly Gain Since Mid-2013
By Dow Jones Business News, February 06, 2015, 04:16:00
By Joseph Adinolfi, MarketWatch
10-year yield records largest one-day rise since November 2013

NEW YORK (MarketWatch) — The 10-year Treasury yield recorded its largest one-week gain since June 2013 Friday, snapping five weeks of declines after the Labor Department’s nonfarm payrolls report for January came in stronger than expected.

The 10-year yield closed at 1.946%, its highest level in four weeks, according to Tradeweb data. The 10-year added 13.1 basis points for the largest one-day yield gain since November 2013.

Bond yields move inversely to prices, rising as prices fall.
…

Credit Markets
Government Bonds Sell Off After Jobs Data
U.S. Adds 257,000 Jobs in January, More Than Expected
By Min Zeng
Updated Feb. 6, 2015 3:59 p.m. ET

A robust U.S. employment report sent government bond prices tumbling for a fourth straight day and fueled an uptick in bets the Federal Reserve will raise short-term interest rates at its June meeting.

The yield on the 10-year note posted the biggest one-day increase since November 2013, and the yield on the two-year note jumped the most on a one-day basis since 2009. Yields rise as prices fall.

The yield on the 10-year U.S. Treasury note rose to 1.94% late Friday from 1.815% Thursday, marking the highest closing level since January 9. The two-year note’s yield increased to 0.643%.

The 10-year yield’s four-day increase was 0.27 percentage point, the most since June 2013 when the bond market was rattled by concerns over the prospect of reduced bond buying from the Fed.

Trading in fed funds futures showed investors now are placing 24% odds on a rate increase at the June Federal Open Market Committee meeting, according to data from CME Group Inc., up from 14% Thursday and 17% a month ago.

Friday’s report, which showed a gain of 257,000 jobs in January, is the latest development in a roaring bond-market debate over the health of the U.S. economy, the prospects for global growth and the role of monetary policy that has captivated traders and analysts since mid-2013. The jobs data offer evidence that the U.S. economy is gathering steam, potentially giving policy makers latitude to raise U.S. short-term rates for the first time since 2006.

“The U.S. economy is the beacon in the world right now,” said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading in New York at Deutsche Bank AG’s private wealth management unit. He said Friday’s report puts a June rate increase “on the table.”
…

This situation is quickly beginning to resemble a collapsing bubble.

February 6, 2015, 1:28 P.M. ET
Investors Exit Treasuries for Fourth Straight Session
By Johanna Bennett

After suffering the biggest three-day sell off since June, U.S. Treasury bonds are falling for a fourth straight day, dragged after a robust government employment report bolstered hopes the Federal Reserve will raise short-term interest rates in June.

In fact, the yield on the benchmark 10-year Treasury climbed as high as 1.944%, its highest level in two weeks according to Tradeweb. Yields rise as prices fall.

The government said Friday, the economy added 257,000 jobs in January, beating estimates and revised figures for December and November by a combined 147,000. Meanwhile, wage grew in January, with the average hourly earnings among private-sector workers gaining 0.5%.

Employment data is being watched closely by central bankers as they debate when and how fast to raise interest rates. Economists had expected a mid-year rate hike, but in recent weeks, many have pushed back their forecast until September or later.

The monthly jobs numbers are volatile, and the January figures are likely to be revised in coming months. Nevertheless, the broader trend alludes to improving job growth in recent months, adding punch to arguments that the U.S. labor market is moving closer to a full recovery from the recession.

Philadelphia Fed President Charles Plosser told CNBC today that he’d argue for raising interest rates sooner rather than later, especially after the release of the strong January jobs report. Meanwhile, Atlanta Fed President Dennis Lockhart said he thinks the U.S. economic growth is strong enough to validate an initial interest rate hike later this year, but admits he remains worried about weak inflation and weak wage growth.

In recent trading, the yield on the 10-year note sat at 1.942% compared to 1.822% yesterday. The five-year note had a yield of 1.462% and the 30-year note sat at 2.518%.
…

Income Investing
News, analysis and commentary on income-generating investments.
February 6, 2015, 2:01 P.M. ET
State Street: Almost $8B Flowed into Fixed-Income ETFs in January
By Johanna Bennett

Amid concerns surrounding Federal Reserve rate hikes, spiking volatility and a slow start to the year for U.S. markets, investors in exchange-traded funds boosted their exposure to bonds in January while pulling nearly $16 billion out of equity-focused exchange-traded funds, according to a report form State Street Global Advisors.

It was not a one-for-one exchange. Investors pulled nearly $15.8 billion from equity ETFs, while fixed-income ETFs experienced $7.9 billion of inflows in January, as yields continued to fall.

Still, the folks at State Street argue that “if the first month of flows is any indication for the fixed income universe of ETFs, 2015 could be even better than 2014.” As State Street’s David B. Mazza writes:

At this current pace, the yearly total would be $96 billion, which would be $41 billion more than the 2014 total.

The race between investment grade and high yield corporate bonds played out in the ETF market with inflows into funds focused on so-called junk bonds slightly outpaced their better-rated counterparts. In all, $2.6 billion flowed into corporate debt in January.

Amid a rally in U.S. Treasuries last month, $2.2 billion flowed into government bond ETFs. Mortgage-backed securities, meanwhile, saw outflows of $82milion. (SIC)
…

Isn’t it amazing how the week of the second-biggest weekly inflows to U.S. government bonds funds on record coincided with huge increases in long-term Treasury yields for several days in a row?

February 6, 2015, 2:36 P.M. ET
Bond Funds Are Fashionable Again
By Johanna Bennett

February has gotten off to a big start for bond funds, with inflows into globally-tracked funds accelerating sharply for the week ended Feb. 4.

Bond funds tracked by EPFR took in a net $21.3 during the week, beating the previous inflow record of $15.7 billion set in the fourth quarter of 2015.

Driving the flow of all that cash? A big desire for U.S. debt.

U.S. Treasuries rallied sharply in January, delivering the biggest monthly gain in three years thanks to worries about economic growth and falling oil prices. Some of those concerns have abated, leading to a recent selloff. Still, U.S. Treasuries remain attractive to investors in Europe and Japan, where government bonds pay far lower yields.

According to EPFR, long-term U.S. government bonds funds posted their second-biggest weekly inflows on record during the week that ended Feb. 4, and U.S. long-term corporate bonds funds set a new record.

Total return, high-yield and balanced funds took in $2 billion in cash during the week that ended Feb. 4, while bank loan, inflation protection and emerging markets local currency bond funds flirted with outflows.
…

If Wall Street stocks crashed the way long-term Treasurys did over the past several days, it would be front-page news on not only the Wall Street Journal and the Financial Times of London, but every local fishwrap paper from Bakersfield to Hoboken.

Although the government bond market is far larger, the MSM is asleep at the wheel when it comes to bond price movements. Go figure!

Yeah, my calculator showed an almost 17% increase in yield on the 10 year treasury the past 5 days. Lots of swooning about. Dow up and down triple digits. Oil.

Investors including US mortgage giant Fannie Mae holding decade-old residential mortgage bonds are fretting over potentially huge losses on securities where delayed foreclosures could lead to complete write-offs on defaulted loans.

Didn’t the Fed’s QE3 MBS purchase program buy up all the bad MBS and bury the toxic nuclear debt waste on their balance sheet forever?

What am I missing here?

“Yeah, my calculator showed an almost 17% increase in yield on the 10 year treasury the past 5 days.”

Are the real financial journalists blind, deaf and dumb? How can they possibly overlook this development, allowing us to relish the pleasure of first bringing it to light here on the HBB?

ft dot com
February 5, 2015 12:02 am
Debt mountains spark fears of another crisis
Ralph Atkins

The world is awash with more debt than before the global financial crisis erupted in 2007, with China’s debt relative to its economic size now exceeding US levels, according to a report.

Global debt has increased by $57tn since 2007 to almost $200tn — far outpacing economic growth, calculates McKinsey & Co, the consultancy. As a share of gross domestic product, debt has risen from 270 per cent to 286 per cent.

McKinsey’s survey of debt across 47 countries — illustrated in an FT interactive graphic — highlights how hopes that the turmoil of the past eight years would spur widespread “deleveraging” to safer levels of indebtedness were misplaced. The report calls for “fresh approaches” to preventing future debt crises.

“Overall debt relative to gross domestic product is now higher in most nations than it was before the crisis,” McKinsey reports. “Higher levels of debt pose questions about financial stability.”

Overall, almost half of the increase in global debt since 2007 was in developing economies, but a third was the result of higher government debt levels in advanced economies. Households have also increased debt levels across economies — the most notable exceptions being crisis-hit countries such as Ireland and the US.

“There are few indications that the current trajectory of rising leverage will change,” the report says. “This calls into question basic assumptions about debt and deleveraging and the adequacy of tools available to manage debt and avoid future crises.”

Countries that McKinsey warns face “potential vulnerabilities” because of high household debt include the Netherlands, South Korea, Canada, Sweden, Australia, Malalysia and Thailand. “It is like a balloon. If you squeeze debt in one place, it pops up somewhere else in the system,” says Richard Dobbs, one of the report’s authors.
…

In fairness, the Wall Street Journal has covered this week’s bond market rout. However you have to dig into p. 5 of the Business and Finance section of the dead tree edition to find it.

Again, if the same magnitude of selloff happened to equities, it would make headline news in every newspaper and top-of-the hour news on radio and TV broadcasts.

I really believe they tax us just for appearances or to keep us poorer. They don’t need our money. They create as much as they like.

True, they could fund government operations merely by printing money. But doing so would not suit the policy goals of the PTB.

Note that devaluing the currency hurts those who hold lots of currency. In other words, the wealthy would be the most affected. Our PTB prefer to extract the little remaining wealth held by the middle-class, not the wealth held by the wealthy.

“True, they could fund government operations merely by printing money. But doing so would not suit the policy goals of the PTB.”

Don’t forget that weakening the average American household’s financial position is a great way to create debt dependency plus a desperate, cowed worker class who live in constant fear of losing their jobs, which is great for personal wealth augmentation activities of the 0.1% Ownership Society members.

See this movie to get a better idea.

True, they could fund government operations merely by printing money.

that’s false, but go on believing it. if it were true we’d have went down zimbabwe style long ago. and also if it were true, the government would have no need to tax. it could simply print and spend. exactly what zimbabwe did.

Recession; incredible prosperity. Which is it? And if it’s not recession, why can’t they disengage?

Which is it? That’s a false dichotomy. There’s a third option. The recession ended a while ago, but the recovery has been very sluggish. An economics writer who writes sentences like that is asking to be ignored.

I did a little “back of the envelope” calculation of the magnitude of loss by Friday for anyone who bought 30-year Treasurys last Monday.

Date 30-year Treasury Yield
2/2/2015 2.25%
2/6/2015 2.51%

Rate increase over 4 days: 26 bps

Value of $1000 Treasury bond purchased on Monday as of Friday market close: $945.43 (5.5% loss)

A comparable drop in the Dow Jones Industrial Average from its current level of 17,824 would amount to a 973 point drop — headline news!

‘asking to be ignored’

Yes, always telling people what they shouldn’t read or think. Too bad for you book burning is out of style.

Here, I’ll explain it real simple like, just for you. Zero interest rate policy/QE = recession policy. All time highs in stocks/some house prices/low unemployment = boom. So the question is, why do we have recession policies in a boom era? And feel free to ignore me anytime. I do my best to ignore you.

“So the question is, why do we have recession policies in a boom era?”

Isn’t the main reason to keep up the appearance of a boom, even though the underlying economic reality for something like 99% of American households is endless bust bordering on financial desperation?

Or am I somehow missing it?

anyone who bought 30-year Treasurys last Monday is insane.

I apologize. You don’t like to be insulted and that’s a reasonable request. I thought that “which is it” was from the article that you linked to.

To answer your question, 5.7% unemployment is generally not considered to be low.

To answer your question, 5.7% unemployment is generally not considered to be low.

yeah, unless you understand WHY it’s at 5.7%

Are you saying that there’s an argument that can be made that 5.7% is a low unemployment rate?

Lest you feel certain the government bond rally is over and done with, note that there remains a potential 75.3% nominal gain in 30-year Treasury bond values between current valuations and the value that would result if the yield dropped from yesterday’s 2.51% down to 0%. And that calculation ignores the even greater increase in real value due to deflation that would accompany such a move, or if rates went to negative levels as they recently did in the Eurozone.

“5.7% unemployment is generally not considered to be low.”

What does 5.7% have to do with an unemployment rate that triple that number?

‘On Wednesday, Mr. Bernanke and the Fed came to that quantitative conclusion: 7% unemployment.’

‘If the economy evolves as the Fed now projects, he said in his opening statement, the Fed will begin to reduce the size of its asset purchases later this year and end them in mid-2014. “In this scenario when asset purchases ultimately come to an end the unemployment rate would likely be in the vicinity of 7%, with solid economic growth supporting further job gains — a substantial improvement from the 8.1% unemployment rate that prevailed when the committee announced this program.”

‘Responding to the first question at the press conference, Mr. Bernanke amplified the significance of that 7%: “There are many factors that we look at when trying to judge the state of the labor market. We look at participation, payrolls, a variety of other data. But the 7% unemployment rate is indicative of the kind of progress we’d like to make in order to say we’ve reached substantial progress.”

‘That remark — equating 7% unemployment to “substantial progress” — appears to have sparked the sharpest market reaction of the press conference. The Dow Jones Industrial Average began a roughly 140-point tumble over a 15-minute stretch.’

http://blogs.wsj.com/economics/2013/06/19/7-unemployment-the-feds-newest-threshold/

@mightymike

listen to ep 51 on the schiff podcast i posted. he explains why the unemployment numbers can’t be trusted.

I listened to part of that. From what I heard, it sounds like he would agree with me that unemployment is not currently low.

I listened to part of that.

too bad you couldn’t stand to listen to all of it because dissecting the unemployment numbers was near the end.

p.s. i know that listening to schiff is painful to liberals. try biting on a leather strap.

He was rambling a lot. He probably could have made his arguments in about half the time he took. He did make an interesting point having to do with Okun’s Law. How could it be that growth slowed in the fourth quarter and then so many jobs were created in January? That’s a good question. His assumption was the job growth would be revised downwards in the future. He didn’t allow for the possibility that the 4th quarter growth rate could be revised upwards. The growth rate right around the beginning of the year could also be better than the average for the fourth quarter.

Then he may some odd remarks about the minimum wage. He stated that the BLS showed some noteworthy increases in pay because some states raised their minimum wages effective at the beginning of the year. Then he stated that will cause an in crease in unemployment in the near future when businesses lay off those workers.

Both of these points raise questions. Since it was just some states, how many workers actually got raises due to the increase in their states’ minimum wage laws? And why would businesses give their employees raises and then lay off them shortly afterwards? Maybe they need some time to determine whether they can pass the higher costs on to their customers. I suppose that that’s a possibility.

If Schiff were pro-free$hit, the LIEberals would love him.

Don’t forget that weakening the average American household’s financial position is a great way to create debt dependency plus a desperate, cowed worker class who live in constant fear of losing their jobs

Oh, totally agree—I should have said it clearly: this is the road to a bankster’s paradise.

1) Dumb ‘em down.
2) Debt ‘em up.
3) Prosper.

He was rambling a lot. He probably could have made his arguments in about half the time he took.

he has to reiterate things for slow witted liberals.

He did make an interesting point having to do with Okun’s Law. How could it be that growth slowed in the fourth quarter and then so many jobs were created in January?

apparently you still haven’t listened to the whole video. it’s only about 20 minutes you know.

His assumption was the job growth would be revised downwards in the future. He didn’t allow for the possibility that the 4th quarter growth rate could be revised upwards.

anything is possible, but why should he assume that 4th qtr growth will be revised upwards?

The growth rate right around the beginning of the year could also be better than the average for the fourth quarter.

again, listen to whole video.

Since it was just some states, how many workers actually got raises due to the increase in their states’ minimum wage laws?

damn few. many more lost their jobs.

And why would businesses give their employees raises and then lay off them shortly afterwards?

forget listening to the video. you probably won’t understand it.

Maybe they need some time to determine whether they can pass the higher costs on to their customers.

they already know to a great degree that they can’t.

google “minimum wage” and “american samoa” and read about it. the do-gooders put in a minimum wage and devastated american samoa’s economy.

If Schiff were pro-free$hit, the LIEberals would love him.

ain’t THAT the truth.

His rambling reminds me of Rush Limbaugh and Sean Hannity. He may want sell his “radio show” to AM stations.

It’s interesting that you agree with my criticisms of his remarks regarding the minimum wage.

The bottom line, though, for me is that this sort of YouTube commentary is not a good way for him to express his analysis of the release of statistics. There are many newspaper and website articles which are a much better way to learn about these things.

It’s interesting that you agree with my criticisms of his remarks regarding the minimum wage.

it’s highly doubtful that i agree with you on anything regarding minimum wage. i agree with schiff. did you look at what minimum wage did to american samoa?

There are many newspaper and website articles which are a much better way to learn about these things.

not without suffering through the liberal spin.

You are right. I keep forgetting my age!

Until the ordinary people have had enough.

The French and American Revolutions have only come once to my knowledge, at least so far.

The French and American Revolutions have only come once
They were both civil wars.

“They were both civil wars.”

Yes and no; plenty of foreign involvement was a factor in both.

The 2nd American Civil War was strictly a domestic affair.

In a rising interest rate environment, stocks went up 80% of the time:

http://www.fa-mag.com/news/what-happens-to-stocks-when-interest-rates-go-up-15840.html?section=

“In a rising interest rate environment, stocks went up 80% of the time…”

What percentage of the time they rose is quite irrelevant.

What is relevant is what percent of the time they dropped by over 20% in a very short time interval.