#1 U.S. retail sales have declined for three months in a row, and that is a very bad sign.
#2 Manufacturing activity in the mid-Atlantic region has declined for three months in a row.
#3 Overall, the U.S. manufacturing sector contracted last month for the first time in almost three years.
#4 Sales of previously occupied homes dropped by 5.4 percent during June.
#5 Initial claims for unemployment benefits rose to 386,000 last week
#6 According to one survey, only 23 percent of all U.S. businesses plan to hire more workers over the next 6 months.
#7 The Philadelphia Fed's employment index indicates that there is bad news ahead for the labor market....
#8 Unless Congress acts, the U.S. Postal Service is going to financially default for the first time ever on August 1st.
#9 The Conference Board's index of leading economic indicators fell by 0.3 percent in June.
#10 A Washington Post survey from April shows that 76% of Americans believe that the U.S. is still in a recession.
#11 According to AARP, 600,000 American homeowners that are 50 years of age or older are currently in foreclosure.
#12 The unemployment rate in New York City is now back up to 10 percent.
63% of laid off South Florida workers forced to live off retirement savings, new study finds - Sun Sentinel (Miami, Florida) - Donna Gehrke-White - July 19, 2012 - Some laid-off South Floridians are going to social service agencies, complaining they have raided savings and retirement accounts just to stay afloat – a trend seen nationally. Almost two thirds of laid-off workers who had a 401(k) retirement account at their last employer withdrew money to pay bills, according to a nationwide survey by the nonprofit Transamerica Center for Retirement Studies. The survey found middle-aged displaced workers are at the greatest risk because of their low amount of retirement savings. Those in their 40s and 50s had only an estimated median retirement savings of $2,300 left in their 401k accounts, according to the survey. The average 401k balance is $71,500, up from about $50,000 when the stock market tanked in 2008 during the onset of the Great Recession, according to Fidelity, one of the largest 401k providers. South Florida social workers say they have had to teach many of the jobless how to apply for food stamps and obtain other services after they have exhausted savings while trying to find new work. The job search can take months – if not years. There are more than 5 million long-term unemployed in the United States who have been looking for work for 27 weeks or more......
More Americans Put Off Medical Care as Costs Rise - CNBC - Jennifer Leigh Parker - July 21, 2012 - The sluggish economy is prompting more Americans to put off medical tests, prescriptions and so-called elective procedures-like knee or hip replacements-and related health care companies are feeling the pain. Many patients are deciding to delay testing or treatment either because they lack insurance, face higher out-of-pocket costs or are afraid to take time off work, health care analysts say. ..... Bird says both doctors and patients are cutting back as new rules from Obamacare-formally known as the Affordable Care Act - have everyone more concerned about rising costs. The impact was clear this past week when companies that specialize in diagnostics (the industry's broad term for disease detection and treatment) reported disappointing earnings. Orthopedic implant maker Stryker (SYK) posted second-quarter earnings that fell short of analysts' expectations. The company attributed the miss to a weaker euro, which hurt overseas sales.
Student loan defaults mimic subprime woes, study shows - NBC News -July 20, 2012 - Borrowers who took out private student loans in the run-up to the financial crisis are facing higher levels of default, reflecting the risky lending practices at the time, the Obama administration said in a new report. The Department of Education and the Consumer Financial Protection Bureau said private lenders have since cleaned up some of the worst activities, but lawmakers should still work to improve the private loan market and enhance protections for students. CFPB Director Richard Cordray said. Student loans fall into two main categories: Loans directly from the government and those offered by banks and other private financial companies. The report focused on private student loans, which spiked from $5 billion in loans originated in 2001 to more than $20 billion in 2008. After the financial crisis, as lending standards tightened, the market shrank to $6 billion in 2011. The report said students taking out private loans may not have fully understood the loans they chose and may have unnecessarily been subjected to more expensive terms. The two agencies said they were required by the Dodd-Frank financial oversight law to study the private student loan market and determine if gaps existed in consumer protection. Federal and private loans do not have to be repaid while the borrower is in school, and both types offer deferment for students seeking post-graduate degrees. But unlike some private loans, federal loans have fixed interest rates and offer adjustments for borrowers who struggle to make payments. Companies also gave loans to borrowers with lower credit scores during that period, the report said. Student loan defaults have since risen, likely due to risky lending as well as a weak labor market. There are now more than $8 billion in defaulted private loans, or 850,000 distinct loans in default. "Subprime-style lending went to college, and now students are paying the price," said Education Secretary Arne Duncan, whose department produced the report. Duncan said the government must do more to ensure that people who received private loans enjoy the same protections as those who borrow from the federal government. After 2008, lenders began requiring co-signers for more loans, increased school involvement in securing private loans and tightened credit standards for loans, the report said.
Cordray and Duncan said Congress should step in to prevent private lending from growing risky again in the future. They want lawmakers to ensure that schools are involved in the private student loan process and find ways to offer relief to struggling recipients of private loans. Congress should take a special look at a 2005 change to bankruptcy law that makes it more difficult to get out of private student loans, Cordray said. The change has not resulted in lower prices or better access and should be revisited, he said. Duncan said his department plans to release a financial aid "shopping sheet" that schools can provide to help students and parents understand the aid and loan packages available to them. "What we don't want ... is for a student to feel like the first time they really understood how much debt they were in was when the first bill arrived," Duncan said. (Study: Student loans went to people who couldn't repay - Daniel Wagner, Associated Press through USA Today - July 20, 2012)
What Recovery? Home Prices May Hit Roadblock Soon - CNBC _- Diana Olick - July 12, 2012 - The recent growth in U.S. home prices may hit a roadblock in the coming months, thanks to a new supply of distressed properties hitting the market. Banks are moving more delinquent loans through the pipeline at a faster pace, according to a new report released Thursday by foreclosure sale website RealtyTrac. The number of homes starting the foreclosure process for the first time grew for the second month in a row on an annual basis. Just over one million properties received some kind of foreclosure filing in the first half of this year, an increase of two percent from the previous six months, according to RealtyTrac. The numbers are still down 11 percent from a year ago, largely because banks were still in settlement talks over the so-called, “robo-signing” foreclosure paperwork scandal. After a $25 billion settlement early this year, the banks began moving loans again. While negative equity is largely centered in the sand states (California, Nevada, Arizona, Florida), other states are not immune. 37 percent of borrowers in Georgia are “underwater” on their mortgages, 35 percent in Michigan and 28 percent in Illinois. Negative equity prevents many borrowers from refinancing their loans to today’s record low rates. The 30 year fixed rate mortgage fell to just 3.56 percent on the Freddie Mac weekly survey.
Borrowers in a negative equity position are also more likely to default on their mortgages. While new delinquencies have been falling, lackluster growth in the job market puts that improvement in a precarious position. The new wave of foreclosures hitting the market will likely turn home prices down again before they can hit a real bottom. Investors in distressed properties, hoping to cash in on the hot rental market, have been frustrated lately at the current lack of supply of foreclosed homes for sale. That, in turn, has pushed home prices higher, as they compete for this small supply. So much of the current market has been made up of these sales, that this supply drain could cause a big drop in overall home sales over the summer. Home prices on a national level may look as if they’re growing, simply because the share of distressed homes selling will drop and the share of non-distressed, higher priced properties, will grow, skewing the averages artificially. We saw that in the National Association of Realtors’ May home sales report. If this theory holds, their June report could show a big drop in sales and a rise in prices, which doesn’t make a lot of sense, but this housing market is unlike any other.
Market-Rigging and Price-Fixing - Daily Reckoning - Eric Fry - Laguna Beach, California - July 19, 2012 - “Markets are so rigged by policymakers that I have no meaningful insights to offer.”
That’s what Nomura International’s Investment Strategist, Bob Janjuah, griped five months ago. Since then, policymakers have stepped up their market-rigging, while new revelations of past market-rigging have also come to light. It’s starting to feel like the financial markets are all rigging and no ship. “I am simply stunned that our policymakers seem so one-dimensional, so short-termist, and so utterly bereft of courage or ideas,” Janjuah remarked last February. “It now seems obvious that in response to the financial crisis that has been with us for five years and counting, we are being told to double up on these same policy decisions [that have failed]. The crisis was caused by central bankers mispricing the cost of capital, which forced a misallocation of capital, driven by debt/leverage, which was ultimately exposed as a hideous asset bubble which then collapsed, destroying the lives and livelihoods of tens of millions of relatively innocent people.” For many years, the Federal Reserve dabbled from time to time in the Treasury market. But almost never in large size or for very long. After the 2008 crisis, the game changed. The Fed aggressively ramped up its purchases of Treasurys — initially in an effort to provide liquidity to the financial sector and later to suppress interest rates [i.e. fix prices]. The Fed conducted these purchases via its infamous “Quantitative Easing” initiatives, followed up by “Operation Twist.” At the end of all this easing and twisting, the Fed became the largest single holder of Treasury Securities — even larger than China, the former #1.
The Libor Scandal In Full Perspective - Paul Craig Roberts - July 19, 2012 - The article about the Libor scandal, coauthored with Nomi Prins, received much attention, with Internet repostings, foreign translation, and video interviews. To further clarify the situation, this article brings to the forefront implications that might not be obvious to those without insider experience and knowledge. The price of Treasury bonds is supported by the Federal Reserve’s large purchases. The Federal Reserve’s purchases are often misread as demand arising from a “flight to quality” due to concern about the EU sovereign debt problem and possible failure of the euro. Another rationale used to explain the demand for Treasuries despite their negative yield is the “flight to safety.” A 2% yield on a Treasury bond is less of a negative interest rate than the yield of a few basis points on a bank CD, and the US government, unlike banks, can use its central bank to print the money to pay off its debts. As the Federal Reserve can create money, theoretically the Federal Reserve’s prop-up schemes could continue until the Federal Reserve owns all dollar-denominated financial assets. To cover the holes in its own balance sheet, the Federal Reserve could just print more money.... Some suspect that the Federal Reserve, in order to forestall a declining dollar and thus declining prices of dollar-denominated financial instruments, is behind the sales of naked shorts every time demand for physical bullion drives up the price of gold and silver. The short sales--paper sales--cancel the impact on price of the increased demand for bullion. Some also believe that they see the Federal Reserve’s hand in the stock market. One day stocks fall 200 points. The next day stocks rise 200 points. This up and down pattern has been ongoing for a long time. One possible explanation is that as wary investors sell their equity holdings, the Federal Reserve, or the “plunge protection team,” steps in and buys. Just as the “terrorist threat” was used to destroy the laws that protect US civil liberty, the financial crisis has resulted in the Federal Reserve moving far outside its charter and normal operating behavior. To sum up, what has happened is that irresponsible and thoughtless--in fact, ideological--deregulation of the financial sector has caused a financial crisis that can only be managed by fraud. Civil damages might be paid, but to halt the fraud itself would mean the collapse of the financial system. Those in charge of the system would prefer the collapse to come from outside, such as from a collapse in the value of the dollar that could be blamed on foreigners, because an outside cause gives them something to blame other than themselves.
Ex-FDIC Chief Bair: Geithner-Led Fed Didn’t Do Enough in Libor Scandal - Newsmax (Money News) - Forrest Jones - July 20, 2012 - Treasury Secretary Timothy Geithner should have probed banks more for allegedly fixing interest rates when he was head of the Federal Reserve Bank of New York back in 2008, said Sheila Bair, former head of the Federal Deposit Insurance Corporation. "Looking at those emails, it looks like they had pretty explicit notification of some very bad behavior, and I don't understand why they didn't investigate," Bair told CNBC. "I think they deserve some credit for trying to suggest some reforms. Even those reforms did not attack the core problem, which was that it wasn't a transaction-based survey. It was a judgment survey. But I don't understand they didn't investigate given what they were being told. I don't understand it, and they did have the authority to do that."
Failing to Break Up the Big Banks is Destroying America - Zero Hedge - George Washington's Blog - July 22, 2012 - ... Indeed, the Obama administration has made it official policy not to prosecute fraud. Top economists, on the other hand, completely contradict Geithner and the rest of the administration ... saying that fraud caused the Great Depression and the current financial crisis, and that the economy will never recover until fraud is prosecuted. Top economists and experts on fraud say that fraud is not only widespread, it is actually the business model adopted by the giant banks. See this, this, this, this, this and this. Therefore, unless the big banks are broken up, financial fraud will grow exponentially like cancer, and the economy will be destroyed. Their Size Allows Them to Rig the Market - The "father of free market economics" - Adam Smith - knew that monopolies hurt the economy. As the Libor scandal shows, the size and concentration of the biggest banks allows them to commit massive manipulation in the world's biggest markets, and to engage in insider trading on a scale never before seen in history. In addition, Richard Alford – former New York Fed economist, trading floor economist and strategist – showed that banks that get too big benefit from “information asymmetry” which disrupts the free market. Nobel prize winning economist Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market. The giants (especially Goldman Sachs) have also used high-frequency program trading which not only distorted the markets – making up more than 70% of stock trades – but which also let the program trading giants take a sneak peak at what the real (aka “human”) traders are buying and selling, and then trade on the insider information. See this, this, this, this and this. (This is frontrunning, which is illegal; but it is a lot bigger than garden variety frontrunning, because the program traders are not only trading based on inside knowledge of what their own clients are doing, they are also trading based on knowledge of what all other traders are doing). Goldman also admitted that its proprietary trading program can “manipulate the markets in unfair ways”. The giant banks have also allegedly used their Counterparty Risk Management Policy Group (CRMPG) to exchange secret information and formulate coordinated mutually beneficial actions, all with the government’s blessings. In other words, a handful of giants doing it, it can manipulate the entire economy in ways which are not good for the American citizen. And the political system. No wonder Nobel prize-winning economist Paul Krugman thinks that we have to break up the big banks to stop their domination of the political process............
Matt Taibbi : LiborGate Explained
Matt Taibbi talks about the Libor Scandal at NatGat : LiborGate is the nickname given to the largest Bankster fraud perpetrated upon the entire planet. Rolling Stones Financial Reporter Matt Taibbi stated, "Because the scale is just mind-boggling. Every town and municipality in America probably has investment holdings that are pegged to LIBOR. I think The Wall Street Journal calculated $800 trillion of financial products. So if there's cartel-style corruption that is affecting the LIBOR rate, it is just impossible to imagine a financial corruption scandal that is bigger in scope than this." This is not just a crisis, or a collapse....it's the greatest fraud every perpetrated. Period. Every American needs to understand what is happening, especially if you dislike hearing the "boring financial stuff , The people who are sucking our system dry are counting on the masses to be ignorant about their outright thievery. Their jargon is a disguise. The mask needs to be removed and the monster beneath must be killed if we are to survive. There are 7 billion people on this planet. The Banksters are outnumbered. It's time for us to overwhelm them with people-power.