Former Obama Advisor: 'Fiscal Cliff' Plunge Likely - CNBC - Eamon Javers - June 26, 2012 - ...In an interview, Bernstein said no matter who wins the Presidency this fall, the fiscal cliff may be unavoidable. “If you actually play out the difference scenarios here, the President wins, Romney wins — it’s hard to see that we don’t go off this fiscal cliff,” Bernstein said. “Because I don’t see how this compromise gets made.”... That said, Bernstein argues that the fiscal cliff may not be the economic nightmare scenario many pundits have described. Bernstein thinks it’s possible to go over the cliff early in 2013, but not for long, and that Washington will come to a deal once the pain kicks in.... “If we can reverse it in a matter of two or three weeks — and there is a scenario in which that can happen — that would do a lot less damage to the economy than if we stayed over the cliff,” he said. Bernstein is currently a fellow at the Center on Budget and Policy Priorities and a CNBC contributor. The fiscal cliff is a series of politically imposed deadlines on tax and spending policy that are all set to hit at the same time at the end of 2012. Taken together, many analysts argue that a massive decrease in federal spending and increase in federal taxation could paralyze the economy just as it is struggling to creep out of recession. Here’s what’s slated to end by the end of the year: The US government is expected to hit the debt ceiling of $16.394 trillion by the end of 2012, although Treasury has ways of stretching this that could push that deadline into the early part of 2013. Speaker Boehner has said he’ll only support extending the debt limit again if there are spending cuts put in place that are larger than the debt increase itself. That, plus Democrats’ insistence on increased taxes, could force a rerun of last year’s damaging debt ceiling debate. The Bush tax cuts are slated to expire by the end of this year, too. Democrats and the President want to extend them only for those making less than $250,000 per year, while Republicans would like to extend the entire set of cuts. In the context of the debt debate, this will be a tricky one to resolve. Remember the “sequester?” That’s the term for automatic spending cuts set to kick in at the end of this year because last year’s super committee was unable to reach a spending deal. The cuts total about $1.2 trillion, and they start January 2, split between defense and domestic spending and causing an estimated 15 percent across the board cut at the Pentagon. Throw in a payroll tax holiday expiration and emergency unemployment benefits ending at the end of the year as well, and we’re looking at a very tough New Year’s Eve in Washington.
U.S. Economic Confidence Continues to Slide - Economic confidence declines to -26, lowest since late January - Gallup - Jenny Marlar - June 26, 2012 - U.S. economic confidence last week was hardest hit June 19-21, when it fell to -28, but it bounced back to -25 over the weekend. The midweek slide may have resulted from the anticipated Moody's downgrade of several major banks and one of the worst trading days of the year on Thursday. However, the market rallied back on Friday, which may have led to the weekend improvement in confidence. Gallup's Economic Confidence Index consists of two measures -- one assessing current economic conditions and the other assessing the nation's economic outlook. Americans' perceptions of current economic conditions worsened to -31, down four from the previous week, with 44% saying the economy is poor and 13% saying it is excellent or good. Attitudes about the economic outlook were down marginally last week, at -21.
Mortgage applications fell last week: MBA - Reuters - June 27, 2012 - Reporting by Anna Louie Sussman; Editing by Diane Craft - Applications for U.S. home mortgages fell last week as refinancing applications for government loans slowed, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 7.1 percent in the week ended June 22. The MBA's seasonally adjusted index of refinancing applications decreased by 8.3 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, fell by 1.4 percent. The refinance share of total mortgage activity fell to 79 percent of applications from more than 81 percent the week before. Michael Fratantoni, MBA's vice president of research and economics, attributed the decline to a fall-off in refinance applications for government-backed loans, which had soared the previous week. "The large swings in activity were due to the implementation of FHA's new premiums on streamline refinances, and borrowers timing their application to lower their premiums," he said in a statement.
Wash Trading by High-Frequency Firms Said to Face U.S. Scrutiny - Bloomberg - Joshua Gallu and Silla Brush - Jun 22, 2012 - High-frequency trading firms are drawing scrutiny from U.S. regulators seeking evidence that they may be distorting market prices by conducting transactions with themselves, said two people with knowledge of the matter. So-called wash trades, in which a party buys a contract from itself, could be executed inadvertently by firms with multiple algorithms active in the same stock or derivative, said the people, who requested anonymity because the review isn’t public. Such trades, which can alter the price of shares if they are executed above or below market rates, would be illegal if deemed intentional efforts to manipulate stocks. The Securities and Exchange Commission and Commodity Futures Trading Commission have sharpened their focus on high- frequency and algorithmic trading since May 6, 2010, when about $862 billion was erased from stock values in 20 minutes before share prices recovered from the plunge. Regulators have expressed concern that some firms and electronic exchanges don’t have sufficient controls to prevent a range of events -- from improper trades to programming glitches -- that could roil markets even when there is no wrongdoing. High-frequency trading, in which computer algorithms are used to buy and sell stocks in fractions of a second, accounts for more than half of equity trading volume. Getco LLC and Citadel LLC, both based in Chicago, and New York-based Virtu Financial LLC are among the biggest automated-trading firms.
17 Reasons To Be EXTREMELY Concerned About The Second Half Of 2012 - The Economic Collapse Blog - What is the second half of 2012 going to bring? Are things going to get even worse than they are right now? Unfortunately, that appears more likely with each passing day. I will admit that I am extremely concerned about the second half of 2012. Historically, a financial crisis is much more likely to begin in the fall than during any other season of the year. Just think about it. The stock market crash of 1929 happened in the fall. "Black Monday" happened on October 19th, 1987. The financial crisis of 2008 started in the fall. There just seems to be something about the fall that brings out the worst in the financial markets. But of course there is not a stock market crash every year. So are there specific reasons why we should be extremely concerned about what is coming this year? Yes, there are. The ingredients for a "perfect storm" are slowly coming together, and in the months ahead we could very well see the next wave of the economic collapse strike. Sadly, we have never even come close to recovering from the last recession, and this next crisis might end up being even more painful than the last one. The following are 17 reasons to be extremely concerned about the second half of 2012.... #1 Historical Trends... #2 JP Morgan... #3 Derivatives... #4 LEAP/E2020 Warning... #5 Increasing Pessimism... #6 Spain... #7 Italy... #8 Greece... #9 Cyprus... #10 Germany... #11 Bank Runs... #12 Preparations For The Collapse Of The Eurozone... #13 Global Lending Is Slowing Down... #14 Sophisticated Cyber Attacks On Banks... #15 U.S. Municipal Bankruptcies... #16 The Obamacare Decision... #17 The U.S. Election...
Why the Middle Class Is Doomed - Of Two minds - Charles Hugh Smith - April 17, 2012 - The dwindling middle class, squeezed by higher taxes and costs, is losing its political voice. The middle class is doomed by some very basic dynamics. Economic historian David Hackett Fischer laid out the fundamental dynamic in his book The Great Wave: Price Revolutions and the Rhythm of History. By assembling price and wage data stretching back hundreds of years, Fischer found that cycles of economic growth spawned population growth, an expanding number of workers entering the market economy (as opposed to the non-market subsistence economy) and a demand-driven expansion of essential commodities such as grain and energy (wood, coal, oil, etc.). In the initial phase, wages rise and commodity prices remain stable as supplies of essential goods expand and the demand for labor pushes up wages. But this virtuous cycle reverses when the supply of essentials no longer keeps pace with rising population and demand: the price of essentials begin an inexorable rise even as an oversupply of labor drives down wages.
Declining Wages
Income by Age Bracket
What all this reveals is that the middle class has lost its political power. Roughly 40% of all households receive a check or equivalent from the Federal government, while at the top Power Elite crony capitalists skim capital gains and pay an average of 17% of all income. The 100 million dependents on the Federal government (Central State) vote to support their share of the largesse, regardless of the consequences to future generations, and the Power Elite crony capitalists buy political protection for their cartels and financialization scams. The dwindling middle class ends up paying most of the taxes even as their percentage of the population falls to the point that their political voice is drowned out by more numerous dependents and Elites that both favor the Status Quo.
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