Factory owners: Federal prisoners stealing our business - CNN Money - Emily Jane Fox - August 14, 2012 - Just hearing the word Unicor is enough to make Kurt Wilson see red. Unicor is a government-run enterprise that employs over 13,000 inmates -- at wages as low as 23 cents an hour -- to make goods for the Pentagon and other federal agencies. With some exceptions, Unicor gets first dibs on federal contracts over private companies as long as its bid is comparable in price, quantity and delivery. In other words: If Unicor wants a contract, it gets it. And that makes Wilson and other small business owners angry. Wilson has been competing with Unicor for 20 years. He's an executive at American Apparel Inc., an Alabama company that makes military uniforms. (It is not affiliated with the international retailer of the same name.) He has gone head-to-head with Unicor on just about every product his company makes -- and said he has laid off 150 people over the years as a result. "We pay employees $9 on average," Wilson said. "They get full medical insurance, 401(k) plans and paid vacation. Yet we're competing against a federal program that doesn't pay any of that."
Unemployment rates rise in 44 states in July - AP through USA Today - Christopher S. Rugaber - August 17, 2012 - The Labor Department said Friday that unemployment rates fell in only two states and were unchanged in four. Unemployment rates rose in nine states that are considered battlegrounds in the presidential election. That trend, if it continued, could pose a threat to President Barack Obama's re-election bid in less than three months. Many political scientists say voter attitudes may be shaped more by national economic trends than local or statewide changes. Most Americans probably read or hear more news about the national economy than they do about their local areas, some experts say. And they may not attribute regional economic changes to presidential policies. Overall, the economy hasn't been growing fast enough to generate more hiring. It expanded at an annual rate of only 1.5% in the April-June quarter, down from 2% in the first quarter and 4.1% in the final three months of last year.
Analysis: U.S. corporate earnings point to further gloom - Reuters - Caroline Valetkevitch - August 17, 2012 - For the second quarter, the percentage of companies beating revenue forecasts was the lowest since 2009. For every company that gave a positive outlook, nearly five companies gave negative outlooks, Thomson Reuters data showed. Third-quarter earnings estimates are down sharply, and now show a year-over-year decline of 1.8 percent, which would be the first quarter of negative growth in three years. Overall earnings growth for the second quarter looked pretty solid - 8.4 percent. But a charge taken by Bank of America (NYSE:BAC - News) at this time a year ago skews everything. Take them out, and growth was just 3 percent, according to Thomson Reuters data. Investors said the results raise red flags for coming quarters. Early in expansions, earnings tend to strengthen as cost-cutting efforts boost profits - but revenues tend to catch up as demand increases later in the cycle. That hasn't happened in an expansion
QE3 on horizon for US economy - The Triangle - Douglas Hammond - August 17, 2012 - ...With the world pending a solid plan out of the EU, the U.S. is forced down an inevitable, ill-fated path. We must worry about our own economic strength and future growth; thus the Federal Reserve must stimulate our economy. Well, they don’t have to, but the indecisive, foolish and petty squabbles in Washington in preparation for the 2012 election are certainly not helping. All of these political games have trumped an agreement on a sustainable fiscal policy. The result is that the state of the U.S. economy has been put solely on the shoulders of the Federal Reserve. Regardless of Federal Reserve Chairman Ben Bernanke’s recent announcement, which did not fulfill some analysts’ predictions of round 3 of quantitative easing, 48 percent of economists surveyed by Bloomberg News said that they expect a new round of asset purchases (mostly mortgage-backed securities) to be announced at the Fed’s Sept. 12-13 meeting. We have already gone through QE1 and QE2 as well as a prolonged operation TWIST, which have given us a slow, modest recovery. Asset-purchasing programs will have diminishing returns on the market. With the current state of the U.S. economy and no plan from the EU, the Fed committee doesn’t really have any choice other than not to announce QE3 in September. Therefore, I would love to see them publish a comprehensive cost-benefit analysis for additional quantitative easing. It seems we are shooting ourselves in the foot either way, and as of now I see no real end to this predicament.
Chance of Fed Printing More Money Jumps to 60% - Reuters through Fox Business - August 17, 2012 - Most forecasters have turned more pessimistic on the economy, despite recent, modestly better news on retail sales, payrolls and the battered housing market. The trimmed quarterly growth forecasts for a third straight month. The latest findings are based on a survey of 17 of the Wall Street primary dealers who deal directly with the Fed, as well as an additional 44 economists in the monthly Reuters Poll. It was the first time this wide sample of economists put the probability of more quantitative easing, or QE3, at greater than 50%, with one economist saying there was a 95% chance the Fed will act. The latest consensus was for $500 billion in additional government bond purchases, on top of the $2.3 trillion the Fed has already bought. The highest forecast was for $750 billion. The majority of economists polled thought the Fed's next policy meeting in September was the most likely time for any announcement on QE3. These increased chances of more money printing come despite recent speculation in financial markets that the Fed will wait and see how the economy performs instead of further inflating its swollen balance sheet.
U.S. Authorities Subpoena Seven Banks In LIBOR Probe - Partner Net - Re-posted from ValueWalk - August 16, 2012 - Subpoenas were issued to Barclays PLC (LON:BARC) (NYSE:BCS), Citigroup Inc. (NYSE:C), Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB), JPMorgan Chase & Co. (NYSE:JPM), HSBC Holdings plc (LON:HSBA) (NYSE:HBC), Royal Bank of Scotland Group plc (NYSE:RBS), and UBS AG (NYSE:UBS) by the office of New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen, who are leading the investigation. The United States government is conducting a criminal investigation regarding the possible involvement of other banks in the LIBOR scandal. Investigators want to find out if there is a conspiracy between Barclays other banks in manipulating the LIBOR rates, and if there’s enough evidences and testimonies to file criminal charges... According to analysts, the civil case filed by investors against the banks seeking damages in losses from the LIBOR manipulation will be strengthened if U.S. investigators file criminal charges. Berkshire Bank, a lender based in New York filed a lawsuit against 21 banks in connection with the alleged LIBOR manipulation, and it is seeking the right to represent other financial institutions in a potential class action lawsuit. Barclays paid a $454 million fine, after admitting the bank submitted false London and euro interbank offered rates. The bank’s top two executives, Marcus Agius and Bob Diamond, resigned from their position as chairman and chief executive officer respectively.
The Truth About How The Fed Has Destroyed The Housing Market - Zero Hedge - Tyler Durden - 08/16/2012 - When observing the trends in the housing market, one has two choices: i) listen to the bulls who keep repeating that "housing has bottomed", a false mantra which has been repeated every single year for the past four, or ii) look at the facts. We touched briefly on the facts earlier today when we presented the latest housing starts data:construction of single family residences remains 46 percent below the long-term trend; the more volatile multifamily houses is 15 percent below trend and demand for new homes 47 percent below. This is indicative of reluctance by households to make long-term investments due to fear of another downturn in housing prices. Bloomberg summarizes this succinctly: "This historically weak demand for new homes is inhibiting the recovery of demand for construction workers as well, about 2.3 million of whom remain without work." But the best visual representation of the housing "non-bottom" comes courtesy of the following chart of homes in negative or near-negative equity, which via Bloomberg Brief, is soared in Q4, and is now back to Q1 2010 level at over 13.5 million. What this means is that the foreclosure backlog and the shadow inventory of houses on the market could be as large as 13.5 million in the future, which translates into one simple word: supply. In other words it is Bloomberg, not us, coming up with the perfectly logical idea that a number as large as the total number of underwater mortgages may and will end up on the market as foreclosures, which in turn will clog up the market clearance piping for years, if not decades to come. So who is to blame for this ongoing market clearing failure, which lately is evident in every single market place where fair clearing is prohibited due to visible and invisible hands? Why the Fed of course. But don't take our word: after all when it comes to the Fed's endless (and catastrophic) attempts at central planning, we are "biased."
Most dangerous words in finance: "This time it's different." - CNN Money - Allan Sloan - July 30, 2012 - It's not often that people in my business get to feel prophetic, but this is one of them. Last week Sandy Weill, chief architect of that monstrous flop Citigroup (C), decided that he was wrong in 1998, when he got Congress to repeal the Glass-Steagall Act so that his Travelers conglomerate could combine with Citibank. That reminded me of the first column that I wrote for Newsweek, which I joined in 1995, arguing that repealing Glass-Steagall, which separated commercial banking from investment banking, was a terrible idea. Here's the column. Too bad that Sandy didn't agree with me back then, when it would have done some good.
Three ugly economic predictions no one wants to hear - CNN Money - Moshe Silver, Hedgeye - August 16, 2012 - Three predictions: The first because we know how the money business works – though we do not have proof to hand. The second we are certain will happen – because it has long been the obvious step, and because those most directly affected by it, and who stand to benefit most from it, have been howling loudest at the mere suggestion. The third, because we would certainly consider doing it if we were in charge. All three of our predictions, to the extent they ever come up for public discussion, are loudly discounted by industry pundits, or attacked as vicious assaults on free enterprise, or dismissed as preposterous. 1. More money laundering.... 2. Bank break-ups.... 3. Dividend cuts....
Max Keiser : 99 percent Probability of A Systemic Collapse before next April
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