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Sunday, May 12, 2013

Economic Stories of Relevance in Today's World -- May 12, 2013

The American Dream Is Dead; Long Live the New Dream - Truthout - Cliff DuRand -  May 10, 2013 - The American Dream of upward mobility is dead, thanks to the neoliberal ministrations of capital and government. But a new dream could rise from the mess left by globalization, off-shoring and austerity.                The continuation of the economic crisis of 2008 up to the present has driven home a social trend that has been evident since the late 1970s, the decline of what is usually called "the middle class" and the accompanying American Dream.                     The American Dream is the belief that if you work hard, if you are blessed with at least a modicum of ability and have a little luck, you can succeed. That is, you can rise in society no matter how humble your origin to something better in the way of material well-being, economic security, a settled life and social prestige. It is the dream of upward mobility for oneself, or at least for one's children.                       As Richard Wolff has pointed out in Capitalism Hits the Fan: The Global Economic Meltdown and What to do About it, this upward mobility was a reality for most citizens of the United States for several generations, from 1820 to 1970. For 150 years, real wages rose. In the quarter century from 1947 to 1973, average real wages rose an astounding 75 percent. But that shared prosperity came to a halt in the mid '70s. In the next 25 years, from 1979 to 2005, wages and benefits rose less than 4 percent. The sustained rise in standards of living had been made possible by a conjunction of historical circumstances, circumstances that began to reach exhaustion by the mid 1970s.                      Post WWII prosperity was based on 1. the global economic dominance of the United States; 2. pent up consumer demand from the depression and war years; 3. supportive social programs; 4. some political clout due to a strong union movement that could demand a share of the prosperity; and 5. Keynesian stimulus (military spending, infrastructure development like the interstate highway system, etc.).

The Price Of Copper And 11 Other Recession Indicators That Are Flashing Red - The Economic Collapse Blog - Michael - May 7th, 2013 - There are a dozen significant economic indicators that are warning that the U.S. economy is heading into a recession.  The Dow may have soared past the 15,000 mark, but the economic fundamentals are telling an entirely different story.  If historical patterns hold up, the economy is heading for a very rocky stretch.  For example, the price of copper is called "Dr. Copper" by many economists because it so accurately forecasts the future direction of the U.S. economy.  And so far this year the price of copper is way down.  But that is not the only indicator that is worrying economists.  Home renovation spending has fallen dramatically, retail spending is crashing in a way not seen since the last recession, manufacturing activity and consumer confidence are both declining, and troubling economic data continues to come pouring out of Asia and Europe.  So why do U.S. stocks continue to skyrocket?  Will U.S. financial markets be able to continue to be divorced from reality?  Unfortunately, as we have seen so many times in the past, when stocks do catch up with reality they tend to do so very rapidly.  So you better put on your seatbelts because a crash is coming at some point.                   But most average Americans are not that concerned with the performance of the stock market.  They just want to be able to go to work, pay the bills and provide for their families.  During the last recession, millions of Americans lost their jobs and millions of Americans lost their homes.  If we have another major recession, that will happen again.  Sadly, it appears that another major recession is quickly approaching.
The following are 12 recession indicators that are flashing red...                     #1 The price of copper has traditionally been one of the very best indicators of the future performance of the U.S. economy.  The fact that it is down nearly 20 percent so far this year has many analysts extremely concerned...

How Elites and Media Minimize Dissent and Bury Truth — Paul Craig Roberts - May 10, 2013 -  Over the last several years I have watched the rise of an important new intellect on the American scene. Ron Unz, publisher of The American Conservative, has demonstrated time and again the extraordinary ability to reexamine settled issues and show that the accepted conclusion was incorrect.               One of his early achievements was to dispose of the myth of immigrant crime by demonstrating that “Hispanics have approximately the same crime rates as whites of the same age and gender.” You can imagine the uproar, but Unz won the debate.                             Unz provoked and prevailed in another controversy when he concluded that Mexican-Americans have approximately the same innate intelligence as whites, with their lower IQs being due to transitory socio-economic deprivation.                         He next surprised by showing the connection between the declining real value of the minimum wage (about one-third less than in the 1960s) and immigration. Americans cannot survive on one-third less minimum income than four decades ago, and the unfilled jobs are taken by Hispanics who live many to the room. A higher minimum wage, Unz pointed out, would cure the illegal immigration problem as American citizens would fill the jobs.                      I wrote about some of Unz’s remarkable findings. One of my favorites is his comparison of the responsiveness of the Chinese and US governments to their publics. I found his conclusion convincing that the authoritarian one-party Chinese government was more responsive to the Chinese people than democratic two-party Washington is to the American people.                       The person is rare who can take on such controversial issues in such a professional way that he wins the admiration even of his critics. In my opinion, Ron Unz is a national resource. He has established online libraries of important periodicals and magazines from the pre-Internet era, information that otherwise essentially would be lost. I have not met him, but he donates to this site and is an independent thinker free of The Matrix.                         Unz’s latest article, “Our American Pravda,” is a striking account of the failure of media, regulatory, and national security organizations and subsequent coverups that leave the public deceived. Unz uses the Iraq war as one example:                            “The circumstances surrounding our Iraq War demonstrate this, certainly ranking it among the strangest military conflicts of modern times. The 2001 attacks in America were quickly ascribed to the radical Islamists of al-Qaeda, whose bitterest enemy in the Middle East had always been Saddam Hussein’s secular Baathist regime in Iraq. Yet through misleading public statements, false press leaks, and even forged evidence such as the “yellowcake” documents, the Bush administration and its neoconservative allies utilized the compliant American media to persuade our citizens that Iraq’s nonexistent WMDs posed a deadly national threat and required elimination by war and invasion. Indeed, for several years national polls showed that a large majority of conservatives and Republicans actually believed that Saddam was the mastermind behind 9/11 and the Iraq War was being fought as retribution. Consider how bizarre the history of the 1940s would seem if America had attacked China in retaliation for Pearl Harbor.

Current deficit plunges 32% - CNN Money - May 7, 2013 -  Tax collections rose by $220 billion -- or 16% -- between the start of the fiscal year on Oct. 1 through April 30. Individual and payroll taxes accounted for $184 billion of that increase.                     The tax haul rose sharply primarily because wages and salaries were higher, the payroll tax cut of the past two years expired on Jan. 1 and the fiscal cliff deal brokered over New Year's raised tax rates on high earners.                  Spending, meanwhile, fell 1.9% year over year, the CBO estimated.                               The biggest percentage drop occurred in the payment of unemployment benefits, which were down nearly 25%, or $15 billion. Defense spending fell 5.3%, or $20 billion, and "other activities" -- primarily spending on nondefense programs -- fell 8.6%, or $58 billion.

New Regulations Are Strangling Community Banks - Bloomberg - Camden R. Fine - May 7, 2013 -  The wave of new banking regulations that Congress created to deter and punish Wall Street’s misdeeds is landing with much greater impact on the U.S.’s almost 7,000 community banks than on the too-big-to-fail lenders.                   Community banks didn’t cause the financial crisis; they played by the rules. Because of their time-tested business model, one based on customer relationships rather than transaction volumes, community banks aren’t a threat to the financial system. Yet they are being forced to pay a penalty in regulatory costs -- to comply with rules aimed at preventing the bad behavior on Wall Street from happening again.                              Community banks are also disproportionately affected by the new rules. Right now, banks with less than $10 billion in assets control only 20 percent of total U.S. banking assets. Washington lawmakers and regulators are holding back community banks from devoting their full attention and resources to making more loans and fueling a more robust economic recovery.                     The effect of these regulations is that Congress has added insult to injury for community banks while rewarding the real villains. The megabanks are benefiting from what Bloomberg View calculated is an $83 billion annual taxpayer subsidy, the value of implicit guarantees by the U.S. Treasury. Bloomberg View was correct to characterize the too-big-to-fail subsidy as “a major driver of the largest banks’ profits.”...

New York to sue BofA, Wells Fargo over mortgage practices - Reuters - Karen Freifeld and Aruna Viswanatha - May 6, 2013 - New York Attorney General Eric Schneiderman said on Monday he plans to sue Bank of America Corp (BAC.N) and Wells Fargo and Co (WFC.N) for violating the terms of a settlement designed to end mortgage servicing abuses.                  Schneiderman issued the announcement, which suggests lawsuits could be filed against the banks within two months, ahead of a widely anticipated report from the monitor for the multi-state settlement, which is expected to be critical of banks.                     The planned action is the first involving allegations that top banks, which agreed last year to provide $25 billion in relief to homeowners and comply with a set of servicing standards to atone for foreclosure misconduct, are not living up to their obligations under the deal.                        Schneiderman said that, since last October, his office had documented 339 violations of standards - 210 by Wells Fargo and 129 by Bank of America - dictating the timeline for banks to process mortgage modification applications.                      Schneiderman said he would seek injunctive relief and an order requiring the two banks to comply with the settlement. His statement did not say he was seeking damages or penalties.                         But it is unclear how far Schneiderman can take his efforts, because they come outside the primary channel authorized by the settlement for any potential violations.                        The settlement authorized the monitor to first work with a servicer to correct any potential violations and sue only if the servicer does not fix the errors.                       In an afternoon news conference, Schneiderman acknowledged the authority provided to the monitor, but said he could still move forward.

Japanese manufacturer to add 200 jobs in N.C. (Greenville) - Triangle Business Journal - Lauren K. Ohnesorge - May 8, 2013
Allscripts to add 350 jobs in Raleigh - Triangle Business Journal - Jason deBruyn - May 8, 2013

No Volume, No Problem - Zero Hedge - Tyler Durden - May 11,2013

The IRS as a Political Tool of Tyranny

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