The Economic Populist

Snippets From the 50 State Mortgage Settlement

Robert Oak — Thu, 09 Feb 2012 22:08:54 +0000

As expected, states were strong armed by the administration and have agreed to a $25 billion, 50 state mortgage fraud settlement with five banks for robo-signing and mortgage fraud. According to the Wall Street Journal:

The agreement covers five banks: Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. Together, the five firms handle payments on 55% of all home loans outstanding, or about 27 million mortgages, according to Inside Mortgage Finance.

While the banks pony up $25 billion, they are the ones who made out like bandits.

About $5 billion would be cash payments to states and federal authorities, $17 billion would be pegged for homeowner relief, roughly $3 billion would go for refinancing and $1 billion would be paid to the Federal Housing Administration.

Initial Unemployment Claims were 358,000 for February 4, 2012

Robert Oak — Thu, 09 Feb 2012 19:10:37 +0000

Initial weekly unemployment claims for the week ending on February 4, 2012 were 358,000. The DOL reports this as a decrease of 15,000 from last week. The previous week was revised, from 367,000 to 373,000, an increase of 6,000.

The CBO Predicts a Rotten Economy So Republicans Want to Change It

Robert Oak — Wed, 08 Feb 2012 11:23:03 +0000

Last week the CBO released their report, The Budget and Economic Outlook: Fiscal Years 2012 to 2022. Deficits everywhere, high unemployment, lackluster economic growth and one very scary year, 2013. Below are the CBO economic forecasts.

Consumer Credit Increased 9.3% in December 2011

Robert Oak — Wed, 08 Feb 2012 03:37:42 +0000

The Federal Reserve's consumer credit report for December 2011 shows a 9.3% monthly increase in consumer credit. Revolving credit increased 4.1%, and nonrevolving credit increased 11.8%. The Credit Kraken is clearly on a rampage, for the second month is a row.

Job JOLTS - There are 3.88 Official Unemployed Per Job Opening in December 2011

Robert Oak — Tue, 07 Feb 2012 23:52:03 +0000

JOLTS stands for Job Openings and Labor Turnover Survey. The December 2011 statistics show there were 3.88 official unemployed people hunting for a job to every position available^*. There were 3,376,000 job openings for December 2011, an increase of 8.27%, from the previous month of 3,118,000. This is a marked improvement from last month. While job openings have increased 60% from their June 2009 trough, jobs are still way below the 1.19 person per job opening at the start of the recession. Below is the graph of number of official unemployed, 13.097 million, per job opening for December 2011.

Realize the December JOLTS survey is using the Census and BLS data from before the January 2012 revisions. The 2010 Census and the payrolls benchmark revisions will be incorporated into the JOLTS report for January 2012.

If one takes the official broader definition of unemployment, or U-6, the ratio becomes 7.03^** unemployed people per each job opening for December. The December U-6 unemployment rate was 15.2%. Below is the graph of number of unemployed, using the broader U-6 unemployment definition, per job opening.

About Those 1.252 Million People Who Dropped Out of the Labor Force

Robert Oak — Mon, 06 Feb 2012 10:27:18 +0000

The January unemployment report created quite a stir. Many believed the BLS had simply dropped 1,252,000 people out of the labor force, discarded like trash. Is the BLS an evil doer as so many declare, or could the culprit possibly be the 2010 Census?

We already showed how comparisons between December and January cannot be done due to the incorporation of the 2010 Census data and the yearly population controls, benchmarks and seasonal adjustments incorporated into the January unemployment statistics.

While there is no mythical 1.252 million dropping out of the labor force, there are some highly unusual numbers in the BLS population controls.

The BLS starts the January month with revised population estimates, seasonal adjustments and benchmarks. This year the 2010 Census data was also incorporated into the BLS statistics. They do not go backwards in these revisions. The BLS does not backwards adjust December 2011. Here are the BLS population controls for 2012:

Who's the Big Bad Wolf Now on Foreclosure Fraud and Abuse?

Robert Oak — Sun, 05 Feb 2012 09:41:18 +0000

We all know the story of the three little pigs and the big, bad wolf.

Little pig, little pig, let me come in.
No, no, not by the hair on my chinny chin chin.
Then I'll huff, and I'll puff, and I'll blow your house in.

To date that's been the story of the banks as the big bad wolf, blowing houses down all over America with fraudulent foreclosures, viewing home owners as tasty piglet snacks of profit.

Will we ever see role reversal in this never ending grim tale? Will the big bad wolf finally be our government, blowing down the Banks' house of mortgage and foreclosure fraud? Can the government at least hand Americans just a few bricks at least? It's yet to be seen.

The latest seems to be dueling events. One the one hand, there is a foreclosure fraud settlement in the works for all 50 States, which supposedly gives banks immunity and waves all future legal actions. Yet at the same time, the New York Attorney General filed a civil fraud lawsuit against three major banks over MERS.

Saturday Reads Around the Internets - Recession's Destructive Path

Robert Oak — Sat, 04 Feb 2012 21:56:45 +0000

Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made our eyes pop.

Nine Cities Nearly Destroyed by the Recession

As if you don't need more stark reality on how bad the recession damaged America, a report by IHS Global Insight for the Conference of Mayors reveals nine cities nearly destroyed by this recession.

The nation continues to be mired in an anemic, jobless recovery. And according to a report commissioned by the United States Conference of Mayors, and prepared by IHS Global Insight, many regions in the country still continue to lose jobs. Of the 363 U.S. metropolitan regions reviewed by IHS, only 61 will fully recover all the jobs that were lost during the recession by the end of this year. The rest will recover far fewer — the average city will only recover roughly 40% of jobs lost from peak employment.

The January Employment Report Shows Things Aren't as Rosy as Some Want to Believe

Robert Oak — Sat, 04 Feb 2012 11:10:56 +0000

While the pundits and press gush over this month's employment report, things are still not rosy. The new official unemployed tally is 12,758,000. The average length of unemployment is still very high, 40.1 weeks.

People unemployed for 27 weeks or more is now 42.2% of the total unemployed, or 5,518,000 million. This number has barely budged as a percentage of total unemployed in comparison to pre-recession and historical levels.

Getting It Wrong on the BLS Employment Report

Robert Oak — Sat, 04 Feb 2012 04:46:16 +0000

The December to January unemployment statistics are often reported wrong in the press. We're sorry, god love ya, but these articles are plain incorrect. People like to compare the month to month change in population, the number of people no longer considered part of the labor force and other data. The grave mistake made by so many in the press and elsewhere is not realizing annual population adjustments are placed in the January data, not distributed evenly across the entire year, or backwards applied and that's why one cannot compare these two months. Below is a graph of non-institutional population monthly change. This is the number from where all other unemployment statistics are derived. It represents people 16 and older, not locked up somewhere, in a medical facility or in the military.

See those huge three spikes in the above graph? That's when the latest Census, taken every 10 years, has been incorporated into the data series. What happens is almost a do over, starting with the next year and you see a huge discontinuity in the data when the Census has been incorporated into the non-institutional population statistic. Believe me, we did not get a streaming horde of illegal aliens in one month, nor did everyone decide to give spontaneous birth. Those spikes simply represent the tacking on of population controls to reflect the latest Census.

Unemployment 8.3% for January 2012 - 243,000 Jobs, Really?

Robert Oak — Fri, 03 Feb 2012 22:18:29 +0000

The January 2012 monthly unemployment figures show the official unemployment rate dropped -0.2 percentage points to 8.3% and the total jobs gained were 243,000. Total private jobs came in at 257,000. Government jobs dropped -14,000. Information jobs dropped by -13,000 and financial services payrolls dropped by -5,000. All other major job categories had payroll gains.Temporary jobs increased 20,100. Manufacturing gained a much needed 50,000 jobs.

Wow! 243,000 New Jobs Created in January

Numerian — Fri, 03 Feb 2012 17:24:42 +0000

The headline number from the Unemployment Report this morning showed 243,000 jobs were created, more than the highest estimated increase by any of the economists surveyed before the report was released (the average expected increase from the economist survey was 120,000 jobs). The unemployment rate fell to 8.3%, again lower than predicted, and certainly good news for President Obama. Job growth was nearly across the board – in retail, construction, manufacturing, business services, and the hotel and restaurant industry. You can believe all this if you want, or you can go into the details in the report for some interesting context.

First, ever since the credit crisis of 2008, there has been a trend in the unemployment report that shows a declining participation rate in the job market. While a whopping number of jobs were created in January, a far larger number of people left the labor force - 1,752,000 in fact. The percent of the total working population who did not have jobs rose to 36.7%, an all time high. It’s no wonder the unemployment rate fell, when the denominator shrinks so markedly. The total number of people employed fell by 737,000. So what do you want to celebrate – the 243,000 who got jobs, or the million or so people who dropped by the wayside and are no longer counted in the data?

Ben! Say It Ain't So! America Could Be Like Greece?

Robert Oak — Thu, 02 Feb 2012 22:28:17 +0000

Today Federal Reserve Chair Ben Bernanke testified before the House Budget Committee. The quote which implies America could become Greece is this:

Even the prospect of unsustainable deficits has costs, including an increased possibility of a sudden fiscal crisis. As we have seen in a number of countries recently, interest rates can soar quickly if investors lose confidence in the ability of a government to manage its fiscal policy. Although historical experience and economic theory do not indicate the exact threshold at which the perceived risks associated with the U.S. public debt would increase markedly, we can be sure that, without corrective action, our fiscal trajectory will move the nation ever closer to that point.

Greece? Really? Business Insider calls this plain annoying. The comparison is the wrong country. America really looks like Japan. The dire warning the United States could become like Greece is really about health care costs. Federal outlays for health care are already 5% of GDP and we have apocolyptic projections for meteoric health care costs increases. Here's Bernanke on those:

Manufacturing ISM PMI 54.1% for January 2012

Robert Oak — Wed, 01 Feb 2012 22:04:17 +0000

U.S. manufacturing expanded in January primarily due to new orders and production. The January 2012 ISM Manufacturing Survey increased +1.0 percentage points to 54.1% PMI. December PMI was revised down, from 53.9% to 53.1% in the ISM's annual revisions. The revisions changed mainly due to the U.S. department of Commerce seasonal adjustments algorithm modifications. The revisions overall show there was less decline over summer 2011 than originally reported. Seems the 2008 financial crisis blew out the statistical seasonal adjustment algorithm beyond just S&P's housing statistics.

New Orders increased +2.8 percentage points to 57.6% with Petroleum & Coal leading the charge. Yet December new orders were revised downward, from 57.6% to 54.8%.

A New Orders Index above 52.1%, over time, is generally consistent with an increase in the Census Bureau's real series on manufacturing orders.

ADP Employment Report - 170,000 Private Sector Jobs for January 2012

Robert Oak — Wed, 01 Feb 2012 19:26:53 +0000

ADP, released their proprietary private payrolls jobs report. This month ADP is reporting a gain of 170,000 private sector jobs in January. December 2011 was revised down from 325,000 to 292,000. In contrast, the BLS reported 212,000 private sector jobs for December 2011. Graphed elow are the reported private sector jobs from ADP. This report does not include government, or public jobs.

Case-Shiller Home Prices Decline -3.7% From a Year Ago in November 2011

Robert Oak — Tue, 31 Jan 2012 21:32:00 +0000

The S&P Case Shiller home price index shows a -3.7% decline from a year ago over 20 metropolitan housing markets and a -3.6% decline for the top 10 housing markets from November 2010. Home prices are back to early 2003 levels. S&P on the continued falling home prices:

The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand.

Below is the yearly percent change in the composite-10 and composite-20 Case-Shiller Indices. These are not seasonally adjusted, but comparing from November 2010.

A Rare Ruling on China Might Lead to Minerals Less Rare

Robert Oak — Tue, 31 Jan 2012 11:07:08 +0000

The WTO appellate court has ruled against China's export taxes on minerals. The case was brought by the U.S., Mexico and the E.U.

The Appellate Body, reviewing an earlier decision by a W.T.O. dispute settlement panel, said the panel had gone too far in defining why more than three dozen Chinese policies violated free trade rules. But the appeals group said on Monday that the overall effect of China’s export restrictions was harming international trade and the policies would have to be scrapped.

China is the largest global producer of bauxite, zinc and yellow phosphorus, fluorspar, magnesium, manganese, silicon carbide and silicon metal, the minerals listed in the WTO case.

The United States, European Union and Mexico accused China of using export taxes and quotas to force international chemical companies and other businesses to move their factories to China to tap these resources.

While people rejoice and believe this ruling implies China will have to remove export restrictions on rare earth minerals, au contraire, it's not so.

^{Source: U.S. Department of the Interior. U.S. Geological Survey. China's Rare-Earth Industry. By Pui-Kwan Tse.}

Real Consumer Spending down -0.1%, Personal Income up 0.5%, for December 2011

Robert Oak — Mon, 30 Jan 2012 20:54:26 +0000

People spent less and saved more in December. The Personal Income and Outlays report covers individual income, consumption and savings. Consumer spending was basically flatlined, or -0.02% from last month, while disposable income increased by 0.4%. Personal income increased 0.5% That great holiday shopping record sales hype did not materialize in the aggregate spending statistics, as we pointed out in the retail sales overview. The personal income & outlays report is seasonally adjusted.

Personal consumption expenditures are often called consumer spending and in real dollars, or adjusted for price increases, declined -0.1% from November. Real Personal Consumption Expenditures, or PCE, are about 70% of GDP. We saw mediocre personal consumption for the quarter, which rose only 2%. Real means chained to 2005 dollars, or adjusted for inflation. Below is a graph of real PCE.

Sunday Morning Comics - Space Oddity Edition

Robert Oak — Sun, 29 Jan 2012 11:14:58 +0000

^{Brought to you by the Republican primary -It's not that they say things no one in their right mind would believe. It's the fact people actually vote for them for it.}

Good Morning! Rise and Shine! Get that Cup O' Joe...
break out the O.J....hang out with the pooch...time to check out the economic funnies.

Yes, you too can run a factory of slave laborers, working 14 hour shifts, living in dorms with few breaks or food and get stinking rich from them. A new game has come on board called Sweatshop. It's for real, online. Click on the image below to play the Sweatshop game!

Saturday Reads Around the Internets - OMG Mitt Made Sense

Robert Oak — Sat, 28 Jan 2012 09:22:45 +0000

Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made our eyes pop.

Mitt Romney Speaks Some Truth on Mortgages

There has been more than one sane thing coming from Mitt Romney's mouth (surprise, surprise) and this one was so good even Eliot Spitzer and Dylan Ratigan took note:

Finally, a presidential candidate came out and honestly addressed the biggest problem in our economy, the enormous debt overhang in our mortgage market. A few days ago, Mitt Romney was at a forum in Florida talking about foreclosures, and his comments were actually refreshingly honest about our housing and banking situation and the need for a debt write-down.

Sure beats colonies on the moon, outlawing contraception and returning to the Gold standard.

This is the right approach to the problem. If you force the banks to recognize losses on the mortgage debt they are holding, then all of a sudden they will have an incentive to write down debt. Otherwise, a bank will do anything it can to maintain the fiction that the debt is worth 100 cents on the dollar, including lie, harass, and robo-sign.

Q4 2011 GDP Advance Estimate - 2.8%

Robert Oak — Fri, 27 Jan 2012 19:55:24 +0000

Q4 GDP 2011 came in at 2.8%.. Here is the original BEA GDP report. Q3 2011 GDP remained the same at 1.8%. Real GDP for 2011 is 1.7% for the year. 2010 saw a 3.0% real increase in GDP. Quarterly GDP is reported annualized.

Here Come Commodities on Fire - Thank You Federal Reserve

Robert Oak — Fri, 27 Jan 2012 11:06:39 +0000

Quantitative Easing rumors are now spreading like wildfire. Speculators have already grabbed one commodity, tin.

Tin climbed the most in almost four months in London as prospects of low U.S. interest rates at least until 2014 boosted speculation of increased demand for the metal used in mobile phones, plasma screens and cars.

Gold bugs are also going nuts and most commodities have jumped in prices, almost overnight.

There was a one two three punch by the Federal Reserve. First the FOMC announced uber-low interest rates until 2014.

The Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

Durable Goods Increased 3.0% in December 2011

Robert Oak — Thu, 26 Jan 2012 22:48:16 +0000

New Orders in Durable Goods, advance report, increased +3.0% for December 2011. November durable goods new orders jumped by 4.3% and October was a 0.1% increase. This means for all of Q4, we have an increase in durable goods new orders.

Manufacturing new orders surged 3.9% for December. November manufacturing new orders increased 6.2% but October declined -1.1%.

Core capital goods new orders increased 2.9%, after declining -1.2% in November and -0.9% in October. Core capital goods is an investment gauge for the bet the private sector is placing on America's future economic growth.

New Residential Home Sales Decline -2.2% in December 2011

Robert Oak — Thu, 26 Jan 2012 20:40:03 +0000

In December, New Residential Single Family Home Sales decreased -2.2%, or 307,0000 annualized sales. This report has a ±13.2% monthly margin of error and November single family home sales were significantly revised, from +1.6% to +2.3%. So much for that recovery, new single family home sales are -7.3% below December 2010 levels, which was 331,000 homes. New Home Sales are at a record low, going all the way back to 1963.

New Home Sales for the entire year, on aggregate, are also at a record low of 302,000 units, going all the way back to 1963.

SOTU Reviews & Reactions

Robert Oak — Wed, 25 Jan 2012 20:12:55 +0000

We've heard many a great speech from President Obama before. Last night's State of the Union was no exception. Here at The Economic Populist we say show me the money. We've heard soaring rhetoric from President Obama too many times, yet behind the words, deeds are either opposite or M.I.A.

Still, Obama gave a lot of lip service to U.S. manufacturing and jobs. To even get U.S. manufacturing on the national policy radar is a feat in and of itself. The actual SOTU transcript is on the White House site with a flurry of videos, social media and round tables to boot. Can't say this administration suffers from a lack of word generation!

That said, we all take President Obama at this point with a strong grain of salt. We've been so disappointed already.

Economic Policy Institute Economist Robert Scott noted China's currency manipulation was sorely absent from SOTU. Yet also noted the administration's hands are often tied by Congress:

Kudos to him for continuing to highlight this important issue, but he failed to mention the main cause of our manufacturing woes in the first place: currency manipulation.

IMF Projects Europe in Recession for 2012

Robert Oak — Tue, 24 Jan 2012 20:28:14 +0000

The IMF has significantly lowered economic growth projections for 2012 and 2013. The IMF also predicts a mild recession for Europe in 2012 with the Euro Zone GDP projected to be -0.5% for this year. Below is the IMF chart for new economic output projections.

Apple Not So Cool After All

Robert Oak — Mon, 23 Jan 2012 21:15:42 +0000

The New York Times has a lengthy article, How the U.S. Lost Out on iPhone Work and implies, we, Americans, just can't compete and we should just lay down and die when it comes to advanced manufacturing. Good God, what a sad state of affairs.

In early 2011, President Obama asked what would it take to make the iPhone in the United States instead of China and late Steve Jobs replied:

Those jobs aren’t coming back.

On really? Isn't that the classic CEO speak to get off my case and haven't we heard that one before? Instead of cheap labor being the reason corporations move to China, we have growing, much more sinister, motivations.

It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

2012's Dismal Economic Outlook

Paul Craig Roberts — Mon, 23 Jan 2012 08:09:38 +0000

^{Originally published on Paul Craig Roberts website}

Jobs offshoring, financial deregulation, and 10 years of wars have severely damaged the US economy and the economic prospects of 90% of the American population. The signs are everywhere in front of our eyes. They are in the income distribution data, the Bureau of Labor Statistics (BLS) jobs data, the Census data, the poverty figures, and the high number of food stamp recipients.

The signs are in the foreclosed and boarded-up homes and the accompanying homelessness. They are in closed strip malls; in office building, warehouse, and shopping mall vacancies, and in the huge population losses of America's manufacturing cities.

The New Economy was a hoax, like Saddam Hussein's "weapons of mass destruction" and the "war on terror." Americans were deceived by "their" corrupt government, by greed-driven corporations, and by corporate shills among economists and the pundit class into believing that they were trading middle class "dirty fingernail" jobs in manufacturing for better middle class "clean fingernail" high-tech service jobs. Instead, reasonably paid manufacturing and professional skill jobs, such as software engineering and information technology, were traded for lowly paid jobs as waitresses and bartenders and for jobs in ambulatory health care.

No Bank Prosecutions From Attorney General Who Used To Represent The Banks!

Robert Oak — Sat, 21 Jan 2012 21:25:36 +0000

We all know there is no justice when it comes to criminal and even civil prosecutions for the financial crisis. We all know there is no justice when it comes to foreclosures. Are you aware the Obama administration is about to let the banks once again off the hook?

Maybe this has something to do with it. Reuters gives us just a little insight as to why their have been no criminal prosecutions of banks and civil penalties have been slaps on the wrist.

U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department's criminal division, were partners for years at a Washington law firm that represented a Who's Who of big banks and other companies at the center of alleged foreclosure fraud.

Great, so the highest prosecutor in the land had the Banksters as clients for years.

Holder and Breuer were partners at Covington, the firm's clients included the four largest U.S. banks - Bank of America, Citigroup, JP Morgan Chase and Wells Fargo & Co - as well as at least one other bank that is among the 10 largest mortgage servicers.

Reuters is really piecing together the implications with this paragraph. Wow!

Friday Movie Night - The Party’s Over: How the West Went Bust

Robert Oak — Sat, 21 Jan 2012 07:10:30 +0000

It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!

The BBC produced the below 2011 economic documentary, The Party’s Over: How the West Went Bust. Business editor Robert Pest goes through the U.K. financial and economic history of the last 30 years and concludes, surprise, much of it was illusionary and really kind of stupid. Enjoy.

The focus is on Britain and the loss of their manufacturing base, opting for financialization and a consumer society. Sound familiar?

The Party’s Over: How the West Went Bust

There are two episodes 1 hour each, the video should play through to the second.