• Unemployment as a Lagging Indicator: Not This Time by Michael J. Golde
• Asia: The Mother of All Incumbent Advantages by David Goldman
• Green Shoots Are Poisonous to Your Wealth by Marvin Clark
• The Bernanke Conundrum by Rolfe Winkler, CFA

The Coming Economic Collapse, Part 2 by Graham Summers

The State and Local Government Crisis Looms Larger by The Baseline Scenario

• Slowdown in U.S. Housing May Bottom Out This Year by David Hunkar
• 10-Year Treasury Yield Gone Parabolic; Mortgage Rates, Oil to Rise by Timmothy Posey
• How the Unemployment Report Breaks Down by Zacks.com
• Economic Ramifications of Skyrocketing Long-Term Unemployment by Zacks.com
• Is the Fed Losing the Battle to Keep Mortgage Rates Low? by Loan Survivor

• A Strange Anomaly: Increasing Foreclosures Equals Increased Consumer Spending by Michael J. Golde
• The Horns of a Dilemma: What Lies Ahead? by John Nyaradi
• A Slow Recovery for a Sick Economy by Ray Hendon

US moves into back seat
If the United States and its consumers aren't likely to return as the global economic driver anytime soon, and they most certainly aren't, why should China and other emerging economies still think and act as if the US will return to such a key role? There is now no going back to the old order with its outdated thinking and ways. - W Joseph Stroupe
This article concludes a two-part report.
Part 1: Dollar's wounds reopen

West and Russia
spar, China wins
The Kremlin's choice of Khabarovsk, near the Chinese border, for a summit venue should have sent a clear message to the attending European Union leaders as they discussed future energy supplies from Russia. The Europeans, however, appear to have badly missed the point. - M K Bhadrakumar

CREDIT BUBBLE BULLETIN
Counter-cyclical or counterproductive?
It is imperative not to perpetuate bubbles to the point where they risk systemic collapse. At some point, inflationists should accept that they are a big part of the problem and not the solution. Is that what the bond market is beginning to tell us?
Doug Noland looks at the previous week's events each Monday.

FROM THE BLOG
Obama's recipe for future
President Barack Obama is accumulating power, not promoting economic welfare. America's decline relative to Asia is not baked in the cake - yet - but the cake batter is in the pan, and the pan is en route to the oven. - David Goldman

THE MOGAMBO GURU
Government theft
The latest insane proposal by the US government to seize money from honest workers is to have every employee automatically enrolled in workplace pension plans, quite ignoring the impoverishing effect of long-term stock investments this entails. The only sensible "pension scheme" comes gold-plated!!!

Four is the loneliest number for bonds
CNNMoney.com - USA
The sharp rise in long-term interest rates is alarming, but they aren't high enough yet to choke off an economic recovery. But watch out if they head well ...


Far-right feed off recession
News24 - South Africa
... but I regret the fact that disillusionment as a result of economic depression and a failure to integrate immigrants in our society has led to a rise for ...


Asia Day Ahead: US Economy Lost Fewer Jobs Than Forecast
Bloomberg - USA
The dollar advanced the most against the yen in more than three months and rose versus the euro as economic data showed evidence the US recession is easing, ...



BBC News Ports 'face recession job losses'
BBC News - UK
... executive director of Seeda, said although the coastal towns were "particularly exposed" in the "biggest economic downturn since the great depression", ...


US Stock Futures Decline; Freeport-mcmoran, Exxon Mobil Fall
Bloomberg - USA
US corporate earnings are forecast to decline for two more quarters after dropping the last seven, the longest streak since the Great Depression, ...


'Bold Endeavors' tells how feds can fix economy by spending
USA Today - USA
The agency was created in 1931 in response to the economic collapse that would become the Great Depression. Only a few years before, during the boom times, ...


Why Is There So Much Unemployment in a Depression?
Atlantic Online - USA
Anxiety about the economic environment and (in our current depression, which has involved a large loss in personal wealth as a result of the declines in ...


India May Say Factory Output Fell for Third Month: Week Ahead
Bloomberg - USA
Exports fell 33.2 percent in April, the most in at least 14 years, as the worst global recession since the Great Depression slashed demand for the nation's ...


US to Propose Wider Oversight of Compensation
New York Times - United States
Some of the rules are required by legislation enacted in the wake of the worst financial crisis since the Great Depression, and would apply only to ...


Obama's Economic Circle Keeps Tensions Simmering
New York Times - United States
... the underlying tensions that have gripped Mr. Obama's economic advisers as they have struggled with the gravest financial crisis since the Depression, ...

Let's Get It Straight, Hank Paulsen Is a Prick Who Took Down the Economy

Matt Taibbi, True/Slant

The Wall Street Journal lets a former Goldman Sachs employee write a power-worshipping ode to Bush's disastrous Treasury Secretary.

The moronic media and Obama's jobs numbers
June 09, 2009
You really have to try to be this ignorant More

It all comes down to Keynes
Concerns over the inflation that is threatened by the amazing budget deficit increases in the US and how it should be mastered are misplaced. It is a simple matter of pressing the correct button - "C", "I" or "G" - and a strong does of political courage. - Julian Delasantellis

THE BEAR'S LAIR
Unproductive misery
Productivity growth in the United States is likely to be far lower in the next few years than in the recent past, yet another reason to expect the next decade to be economically a miserable period. - Martin Hutchinson

FROM THE BLOG
Obama's recipe for future
President Barack Obama is accumulating power, not promoting economic welfare. America's decline relative to Asia is not baked in the cake - yet - but the cake batter is in the pan, and the pan is en route to the oven. - David Goldman

THE MOGAMBO GURU
Black and yellow treasure
Oil prices are gushing upwards, the prices of other commodities are surging, Treasury yields are doubling, and the US dollar is plunging. It is all horrible, terrible news - unless you own gold - black or yellow.

I love Obama; I love what his being President means to the world; but in terms of banking and finance, we re-elected Bush

CHART OF THE DAY: We're On The Depression Path
Joe Weisenthal and Kamelia Angelova|Jun. 9, 2009 Green shoots aside, the global slowdown is perfectly tracking the Great Depression.

Read »

Is the Employment Picture Really Better Now Than in 1933? by Big Jake

• "Military-Contracting Waste, Fraud, and Abuse--Just What the Government Wants," by Robert Higgs (6/7/09)
• "Two Views of the Labor Market in the Deepening Recession," by Robert Higgs (6/6/09)
• "The National Debt versus the Deficit," by Jeffrey Rogers Hummel (6/6/09)
• "Are All Legislators Crooks?," by Randall Holcombe (6/5/09)
• "Federal Reserve Cannot Account for $9 Trillion," by David Theroux (6/3/09)
• http://www.independent.org/blog/?p=2336

Tough economic times drive European voters to far right
Jewish Telegraphic Agency - New York,NY,USA
... and extremists during tough economic times. As in the United States, Europe is experiencing levels of unemployment not seen since the Great Depression. ...


Investigators warn bank stress tests not enough
The Associated Press
"TARP is increasingly not being a vehicle for economic stability and taxpayer protection, but is evolving into a $700 billion revolving slush fund that the ...


Reader Comments
U.S. News & World Report - Washington,DC,USA
The stimulus plan in of itself has halted the dramatic plunge in business and consumer confidence with the very likely threat of an economic depression ...


Recession takes big bite out of Tri-Cities retail sales
Kingsport Times News - Kingsport,TN,USA
And since this recession has been very severe (like the 1981-82 downturn), that slow recovery will be starting from a much lower level of economic activity. ...


US banks submit capital replenishment plans: Fed
Reuters - USA
By Mark Felsenthal WASHINGTON (Reuters) - All 10 of the largest US banks under orders to raise additional capital as a buffer against further economic ...


Tiger Stadium demolition resumes after ruling
The Associated Press
I want to know why we're the ones singled out, that when we're behind schedule because of the worst economic conditions since the Great Depression, ...


US Markets Wrap: Most Stocks Retreat, Treasuries Decline
Bloomberg - USA
“Anything that's seen as forcing their hand to raise rates more quickly than they might want to suggest the economic recovery may be slower. ...


OFF THE RUN: Signs Of Life For 'Moribund' Fed-Funds Futures
Wall Street Journal - USA
It took only one piece of economic data, released Friday, to alter that sentiment and create a little uncertainty about the future course of Fed policy. ...


Fed's Tarullo says Fed mulling exec pay proposal
Reuters - USA
Discussing the economy, Tarullo said recent economic data gives reason to hope the recession may be reaching its trough. He warned, however, that any ...

History lesson for economists in thrall to Keynes
By Niall Ferguson

On Wednesday last week, yields on 10-year US Treasuries -- generally seen as the benchmark for long-term interest rates -- rose above 3.73 per cent. Once upon a time that would have been considered rather low. But the financial crisis has changed all that: at the end of last year, the yield on the 10-year fell to 2.06 per cent. In other words, long-term rates have risen by 167 basis points in the space of five months. In relative terms, that represents an 81 per cent jump.

Most commentators were unnerved by this development, coinciding as it did with warnings about the fiscal health of the US. For me, however, it was good news. For it settled a rather public argument between me and the Princeton economist Paul Krugman.

It is a brave or foolhardy man who picks a fight with Mr Krugman, the most recent recipient of the Nobel Prize for Economics. Yet a cat may look at a king, and sometimes a historian can challenge an economist.

A month ago Mr Krugman and I sat on a panel convened in New York to discuss the financial crisis. I made the point that "the running of massive fiscal deficits in excess of 12 per cent of gross domestic product this year, and the issuance therefore of vast quantities of freshly-minted bonds" was likely to push long-term interest rates up, at a time when the Federal Reserve aims at keeping them down. I predicted a "painful tug-of-war between our monetary policy and our fiscal policy, as the markets realise just what a vast quantity of bonds are going to have to be absorbed by the financial system this year".

De haut en bas came the patronising response: I belonged to a "Dark Age" of economics. It was "really sad" that my knowledge of the dismal science had not even got up to 1937 (the year after Keynes's General Theory was published), much less its zenith in 2005 (the year Mr Krugman's macro-economics textbook appeared). Did I not grasp that the key to the crisis was "a vast excess of desired savings over willing investment"? "We have a global savings glut," explained Mr Krugman, "which is why there is, in fact, no upward pressure on interest rates."

Now, I do not need lessons about the General Theory. But I think perhaps Mr Krugman would benefit from a refresher course about that work's historical context. Having reissued his book The Return of Depression Economics, he clearly has an interest in representing the current crisis as a repeat of the 1930s. But it is not. US real GDP is forecast by the International Monetary Fund to fall by 2.8 per cent this year and to stagnate next year. This is a far cry from the early 1930s, when real output collapsed by 30 per cent. So far this is a big recession, comparable in scale with 1973-1975. Nor has globalisation collapsed the way it did in the 1930s.

Credit for averting a second Great Depression should principally go to Fed chairman Ben Bernanke, whose knowledge of the early 1930s banking crisis is second to none, and whose double dose of near-zero short-term rates and quantitative easing -- a doubling of the Fed's balance sheet since September -- has averted a pandemic of bank failures. No doubt, too, the $787bn stimulus package is also boosting US GDP this quarter.

But the stimulus package only accounts for a part of the massive deficit the US federal government is projected to run this year. Borrowing is forecast to be $1,840bn -- equivalent to around half of all federal outlays and 13 per cent of GDP. A deficit this size has not been seen in the US since the second world war. A further $10,000bn will need to be borrowed in the decade ahead, according to the Congressional Budget Office. Even if the White House's over-optimistic growth forecasts are correct, that will still take the gross federal debt above 100 per cent of GDP by 2017. And this ignores the vast off-balance-sheet liabilities of the Medicare and Social Security systems.

It is hardly surprising, then, that the bond market is quailing. For only on Planet Econ-101 (the standard macroeconomics course drummed into every US undergraduate) could such a tidal wave of debt issuance exert "no upward pressure on interest rates".

Of course, Mr Krugman knew what I meant. "The only thing that might drive up interest rates," he acknowledged during our debate, "is that people may grow dubious about the financial solvency of governments." Might? May? The fact is that people -- not least the Chinese government -- are already distinctly dubious. They understand that US fiscal policy implies big purchases of government bonds by the Fed this year, since neither foreign nor private domestic purchases will suffice to fund the deficit. This policy is known as printing money and it is what many governments tried in the 1970s, with inflationary consequences you do not need to be a historian to recall.

No doubt there are powerful deflationary headwinds blowing in the other direction today. There is surplus capacity in world manufacturing. But the price of key commodities has surged since February. Monetary expansion in the US, where M2 is growing at an annual rate of 9 per cent, well above its post-1960 average, seems likely to lead to inflation if not this year, then next. In the words of the Chinese central bank's latest quarterly report: "A policy mistake ... may bring inflation risks to the whole world."

The policy mistake has already been made -- to adopt the fiscal policy of a world war to fight a recession. In the absence of credible commitments to end the chronic US structural deficit, there will be further upward pressure on interest rates, despite the glut of global savings. It was Keynes who noted that "even the most practical man of affairs is usually in the thrall of the ideas of some long-dead economist". Today the long-dead economist is Keynes, and it is professors of economics, not practical men, who are in thrall to his ideas.

The writer is Laurence A. Tisch professor of history at Harvard University and author of The Ascent of Money (Penguin)

The Next Great Crisis: America's Debt -- Fortune

At this rate, your share of the load will be $155,000 in a decade. How chronic deficits are putting the country on a path to fiscal collapse.

Normally Paul Krugman, the liberal pundit and Nobel laureate in economics, and Paul Ryan, a conservative Republican congressman from Wisconsin, share little in common except their first names and a scorching passion for views they champion from opposite political poles. So when the two combatants agree on a fundamental threat to the U.S. economy, Americans should heed this alarm as the real thing. What's worrying both Krugman and Ryan is the rapid increase in the federal debt - not so much the stimulus-driven rise to mountainous levels in the next few years, but the huge structural deficits that, under all projections, keep building the burden far into the future to unsustainable, ruinous heights. "The long-term outlook remains worrying," warned Krugman in his New York Times column. Krugman strongly supports President Obama's spending plans but bemoans the shortfall in taxes to pay for them.

Read more ....

10 big banks get OK to repay $68B in bailout money. More news here.

China airs fears on US debt, dollar: lawmaker.

U.S. Unemployment numbers may be worse than you think.

Crude passes $70 but gas prices flatten.

This will be an "L" shaped recovery. That is, jobs will fall, fall, fall, until they stop. THERE WILL BE NO RECOVERY FOR THE JOBLESS. The formerly employed will have to re-invent themselves.

The Chinese and Indians who comprise 40 percent of the planet will begin to "consume", thus outsourcing our final purpose on the planet - - going to the mall.

The banks will do fine, because the US Dollar will succeed in becoming the SOLE RESERVE CURRENCY. It is already used in 80% of all business deals, even though US goods and services only make up 15% of global GDP.

The price of oil will continue to rise (partly to soak up some of those US Dollars) but also because all the cheap stuff has either been used up or resides underneath AngloAmerican combat boots in Iraq.

We need to take an inventory of our structures, infrastructures, and skill sets to look to the future.

The past is history and will NEVER NEVER return.

The Economy Is Still At the Brink - NY Times

The Real Unemployment Rate Hits a 68-Year High
Dollars & Sense - Cambridge,MA,USA
In fact, no bout of unemployment since the last year of the Great Depression in 1941 would have produced an adjusted unemployment rate as high as today's. ...
See all stories on this topic

Roubini: Those Are Yellow Weeds, Not Green Shoots
June 9, 2009, 9:40 AM ET
By WSJ Staff

The still-pessimistic Nouriel Roubini offers *nine* reasons for pessimism:

* First, employment is still falling sharply in the U.S. and other economies. This will be bad news for consumption and the size of bank losses.

* Second, this is a crisis of solvency, not just liquidity, but true deleveraging has not really started, because private losses and debts of households, financial institutions, and even corporations are not being reduced, but rather socialized and put on government balance sheets. Lack of deleveraging will limit the ability of banks to lend, households to spend, and firms to invest.

* Third, in countries running current-account deficits, consumers need to cut spending and save much more for many years. Shopped out, savings-less, and debt-burdened consumers have been hit by a wealth shock (falling home prices and stock markets), rising debt-service ratios, and falling incomes and employment.

* Fourth, the financial system — despite the policy backstop — is severely damaged. So the credit crunch will not ease quickly.

* Fifth, weak profitability, owing to high debts and default risk, low economic — and thus revenue — growth, and persistent deflationary pressure on companies’ margins, will continue to constrain firms’ willingness to produce, hire workers, and invest.

More…

Jim Sinclair’s Commentary

The only things that are dollar positive is that the USDX as an index is small enough to manipulate, and the Commercials are still not yet in position for what is coming in gold.

There is an axiom that states the more leveraged market always leads the less leveraged market. That axiom means an index will lead cash but stand behind the listed derivative market, which in turn stands behind the swap market for currencies.

The means of manipulating almost everything is via the index trading supported by the ETF activity.

The dollar has NO future outside of blind algorithms, spin and index manipulation. NONE.

Gold is the inverse of the dollar and that is all you really need to know. This action taking place is productive to the future of gold if you truly understand what is afoot.

The following is one more piece of evidence of the contraction of demand for dollars as QE is an ever-flowing fountain of dollar supply via electronic creation.

Do not think it is a static picture in time, but instead look at it as values in motion.

The motion in dollar demand is down as the headline below adds Russia now to China’s approach. A swap of Treasuries for baskets is good for diversification, if the IMF is willing, as you move out of dollar denominated into basket denominated. What is being missed is this Chinese and Russian transaction with the IMF indicates diversification interest will continue. The spin doctors and general public will see this as a onetime offset and therefore not market indicative, but in fact it is a major move in momentum and downward confidence factor.

Stand back from the minute to minute, day to day action that unseats you from your insurance and trust that fundamentals will trash the algorithms in time. If that was NOT true, we would not be in the trouble we are in NOW.

Russia May Swap Some U.S. Treasuries for IMF Debt
By Alex Nicholson

June 10 (Bloomberg) — Russia’s central bank said it may cut investments in U.S. Treasuries, currently valued at as much as $140 billion, a week after China said it may reduce reliance on the dollar and American bonds.

Treasuries fell after Alexei Ulyukayev, first deputy chairman of Bank Rossii, said some reserves may be moved into International Monetary Fund debt. The yield on the 10-year note rose six basis points, or 0.06 percentage point, to 3.92 percent as of 8:27 a.m. in New York, according to BGCantor Market Data.

Finance Minister Kudrin said on May 26 Russia will buy $10 billion of IMF bonds from the reserves and China may buy as much as $50 billion, IMF Managing Director Dominique Strauss-Kahn said yesterday. Some investors are wary of U.S. assets because the budget deficit is projected to reach $1.75 trillion in the year ending Sept. 30 from last year’s $455 billion, the Congressional Budget Office says.

“The bigger picture is people are worried there are too many Treasuries, and that no one is even making a pretense of getting the fiscal deficit under control,” said Francis Beddington, co-founder of Insparo Asset Management, which oversees about $140 million in London. By Andre Soliani and Telma Marotto

Brazil will use part of its reserves to provide $10 billion in financing to the IMF, Finance Minister Guido Mantega said in Brasilia today.

More…

Black HoleTruly terrifying data about the real state of the U.S. economy.
By Eliot Spitzer Posted Wednesday, June 3, 2009, at 7:23 AM ET

I have an unfortunate sense that the "green shoots" in the economy that everyone is talking about are nothing but dandelions. Sure, forcing $1 trillion of taxpayer money—in direct capital, guarantees, and diminished cost of borrowing—into the banking sector has permitted the major banks to claim solvency for the moment. Yet we should not forget that this solvency has come not through a much needed deleveraging of the banking sector but rather from a massive transfer of the obligations of private banks to the public, with the debt accruing to future generations. And overall loan quality at U.S. banks is still the worst in 25 years and deteriorating at the fastest pace ever.

It’s a terrible mistake to confuse the momentary solvency of the financial sector and the long-term health of our economy.

While we have addressed the credit collapse, we have not begun to tackle the far more daunting, and more significant, structural problems in the economy. Instead of focusing on the green shoots, let’s examine the macro data that will determine our national prosperity in the next generation. These data are terrifying.

Start with the job front. Long term, nothing is more fundamental than good jobs to creating the middle-class wealth that must drive the economy. The creation of true middle-class jobs was the great success of our economy from 1950s through the mid-1990s. Consider the job data, in aggregate and by sector, from the past decade. (All data are from the U.S. Department of Labor, Bureau of Labor Statistics.)

More…

Treasuries Fall After Auction, Russian Threat to Cut Holdings
By Dakin Campbell and Dan Kruger

June 10 (Bloomberg) — Treasuries fell, pushing 10-year yields to the highest level since November, as the government sold $19 billion of the securities and Russia said it may switch some of its reserves from U.S. debt.

Thirty-year bond yields reached the most in a year after a Russian central bank official said the nation may buy International Monetary Fund bonds. Today’s auction is the second of three sales this week that will raise $65 billion, part of the U.S.’s record borrowing program.

“It’s the same situation of overwhelming supply versus spotty demand,” said John Spinello, chief technical strategist in New York at Jefferies Group Inc., a brokerage for institutional investors, before the auction. “The trend is still against the market.”

The yield on the 10-year note rose 13 basis points, or 0.13 percentage point, to 3.98 percent at 1:03 a.m. in New York, according to BGCantor Market Data. The 3.125 percent security maturing in May 2019 declined 1, or $10 per $1,000 face amount, to 93.

The 30-year bond yield touched 4.77 percent, the highest in a year. The government is scheduled to sell $11 billion of the securities tomorrow.

More…

Russia May Swap Some U.S. Treasuries for IMF Debt : -- Russia may switch some of its reserves from U.S. Treasuries to International Monetary Fund bonds, the central bank said today. The comment drove Treasuries and the dollar lower.

The next great crisis: America's debt: At this rate, your share of the load will be $155,000 in a decade. How chronic deficits are putting the country on a path to fiscal collapse.

Unemployment at 10% to Depress Consumer Spending, Survey Shows: Surging unemployment in the U.S. will delay a recovery in consumer spending and mute the rebound when it does materialize, according to a Bloomberg News survey.

Median home prices drop below 1989 levels : Properties in several areas are selling for less than they did 20 years ago, and that's not including inflation. Some first-time buyers are nabbing houses for less than what their parents paid.

The "correct" price of a home is that amount which, when financed with a conventional 80/20 mortgage, can be paid off by the owners using real money from real jobs that pay real wages or salaries.

Using the 1 percent rule (P and I, Taxes, Insurance), a $500,000 home needs to house a family that can pay $5,000 a month to live there.

Eventually, if salaries don't rise (and I can't see why they would). housing prices must FALL to that price that the occupants can afford to pay.

It's not rocket science.

I'm not so sure about the dollar as the reserve currency...it appears IMF bonds and a basket of currencies are the new pay-o-la.
It will be based on commodities, Russia's oil, China and India's dollars, IMHO.



Unless of course you live in a $500,000 house, but only owe $160,000 on it. Those of us who didn't use them as ATMs can make it.
However, we must maintenance and work to bring in the squash, tomatos and green beans we grow for practice...so that we can.

Naaahhhhh. IMF talking 250 billion $$$.

Chump change.

Real money is in TRILLIONS.


Hey, if you can make it work, more power to ya.

The Five Waves Of The Housing Collapse
A Red (Ink) Letter Day For Gov't: $1,000,000,000,000 In 8 Months
Depression Deepens in Europe
The 31-Year-Old in Charge of Dismantling G.M.
German inflation hits zero
Consumer debt threatens recovery
Greenspan: The-Too-Big-To-Fail Phenomenon Could Cripple Economy
Green Shoots or Yellow Weeds?
Obama Refi Plan: Does It Work at 5.5%?
True or False: U.S. Economic Stats Lie

Economy: Fed Sees Bright Spots in Weak Economy
By JACK HEALY
While the economy may be dreary, the Federal Reserve said
there was slightly improved data in a few areas.

Full Story:
http://www.nytimes.com/2009/06/11/business...amp;tntemail1=y

Treasuries Tumble After Auction, Russian Threat to Cut Holdings Treasuries fell, pushing 10-year yields to the highest level since October, as the government sold $19 billion of the securities and Russia said it may switch some reserves from U.S. debt. The notes drew a yield of 3.99 percent, the highest since August 2008. The auction was the second of three sales this week that will raise $65 billion, part of the government's record borrowing program. Bloomberg

U.S. budget deficit nears $1 trillion Treasury Department says the May shortfall was $189.6 billion, bringing the total deficit for the current fiscal year to $991.95 billion. The federal budget deficit surged in May, bringing the total shortfall for this fiscal year to nearly $1 trillion, government figures showed Wednesday. CNN Money

German retailer Arcandor files for insolvency Struggling German retail and tourism group Arcandor has filed for bankruptcy after the government rejected its request for emergency state aid. German retail group Arcandor, which has over 50,000 employees in Germany, said on Tuesday that it would not improve its rejected application for state aid and would instead file for insolvency. Deutsche Welle

Jon Stewart on the GM Bankruptcy Now that we taxpayers own a controlling stake in General Motors, I'm really looking forward to sitting in on design meetings and offering my two cents. Maybe I'll finally realize my dream of owning a car with a glove compartment that makes spaghetti. Just kidding, I haven't paid taxes since 1997. Here's Jon Stewart's take on the issue... Comedy Central

Ireland's credit rating is cut The Irish Republic's credit ratings were cut for the second time in three months on Monday amid rising worries over the cost of bailing out the country's banking sector. Standard & Poor's reduced Ireland's long-term credit ratings to double A, with a negative outlook, from double A plus. The country lost its top triple A rating at the end of March... Financial Times

BRIC's Yaketenaburg summit BRIC- Brazil, Russia, India and China meet to begin June 16, top leaders to attend are Prime Minister Manmohan Singh and Chinese President Hu Jintao along with the presidents of Russia and Brazil.Dr Singh will be attending both the BRIC and SCO meetings. However the ministry of external affairs refused to confirm Dr Singh's attendance at the SCO... Now Public

US Market

• Falling Equities Still Key for U.S. Dollar by Ashraf Laidi
• Market Policy: We Don't Need a False Sense of Hope by Sydney Williams
• Treasuries Are Toast: Foreign Buyers Losing Interest by Plan B Economics
• Transfer of Toxic Assets from Banks to Government Doesn't Remove the Risk by Etoile Brilliant
• Is Bernanke Bumping the Dollar? by John Dalt
• Foreclosures Slow Down, But No Sign of Stopping by Tyler Durden
• U.S. Dollar Under Selling Pressure by Anna Fedec
• The End of the Treasury Bond Bull Run and Its Implications by Faisal Humayun
• Rising Treasury Yields Are Not a Threat to the Economy by Calafia Beach Pundit
• The Markets Keep Mixing It Up by Dr. Stephen Leeb
• Dollar Rebound Could Cause Pullback Commodities, Foreign Stocks, Bonds by J.D. Steinhilber
• The 'Bond Vigilantes' Are Back by J.D. Steinhilber
• Tracking TARP Funds by Donald Marron
• The Next Big Dollar Inflation Can Still Be Avoided by Benign Brodwicz
• Has Obama Run Out of Maneuvering Room Already? by David Goldman
• John Maynard Keynes Was Right by Casey B. Mulligan
• Citi's TARP Convert and Chrysler's Indiana Bond Holders by Bruce Krasting
• Exports and Imports Still Falling by Zacks.com
• The Russians Want Fewer Dollars - So They Say by Tom Lindmark
• Laffer Getting Ready for Inflation and Higher Rates by David Enke
• Housing Is Not Recovering - Surprise, Surprise by Karl Denninger

Reverse Gender Gap in Unemployment
June 11, 2009
Data from the Bureau of Labor Statistics reveals a huge gender imbalance in unemployment, one which the ever-vigilant mainstream press has curiously ignored. More

How to Really Create or Save Two Million Jobs
Jeffrey Folks
President Obama has spoken recently of "creating or saving" 600,000 jobs at a mere expense of $787 billion. Sixty thousand of these, he claims, have already been created or saved. Just last month, of course, it was a million jobs... More

Spent: America After Consumerism - Amitai Etzioni, The New Republic
Inflation Looms - Dick Morris and Eileen McGann, New York Post
W-Shaped Cycles Could Be With Us for Years - William Pesek, Bloomberg
10 Reasons the Worst of the Crisis is Over - David Callaway, MarketWatch
Wall Street's False Armistice - William Greider, The Nation
TARP Payback Is Nothing to Cheer - Editorial, New York Times
Daunting Decisions on a New Risk Regulator - Emil Henry, Financial Times
Sidelined Cash Has Street Salivating - Walter Hamilton, Los Angeles Times
You Can Still Retire Rich...Really - Birger & Kaplan, Fortune
Behind Oil's Surprising Surge - Stanley Reed, BusinessWeek
The President's Paygo Schtick - Editorial, Investor's Business Daily
A Big-Ticket Item That Drives Deficits - Diana Furchtgott-Roth, RCM
Is Eastern Europe On Brink Of Asia-Style Crisis? - Nouriel Roubini, Forbes

World Bank Sees 3% Global Contraction
Wall Street Journal - USA
... alike for the first time since Great Depression. While the IMF gives credit to the role of stimulus spending in boosting economic growth somewhat, ...




Japan's Economic Rebound May Be Stymied By a Dearth of Demand
Bloomberg - USA
Nobel Prize-winning economist Paul Krugman this week said that although the world's biggest economy has dodged a second Great Depression, growth will be ...


Anna Schwartz Says The Bailouts Leave The Market "Bewildered"
The Business Insider - New York,NY,USA
... When an economic historian comes along in 25 or 30 years and tries to do for this episode what you and Professor Friedman did for the Great Depression, ...


China's Exports Fall by Record After Global Demand Dries Up
Bloomberg - USA
... has cut taxes, boosted lending and pledged to keep its currency stable to sustain overseas sales amid the worst global slump since the Great Depression. ...



The Star-Ledger - NJ.com Forecaster: Baby Boomers won't give economy a boost
The Star-Ledger - NJ.com - Newark,NJ,USA
I think seeing this downturn is going to make them more grounded and more realistic, just like the generation that grew up during the Great Depression and ...


International Energy Agency makes first upward revision to 2009 ...
Los Angeles Times - CA,USA
"These revisions do not necessarily imply the beginnings of a global economic recovery and may only signal the bottoming out of the recession," the IEA said ...


Jeremy Warner: Recession may be over but not the pain
Independent - London,England,UK
John Major managed to win an election in the depths of a recession but then lost the next one even though the economic recovery was by then well established ...


Thai Confidence Falls to Seven-Year Low on Recession
Bloomberg - USA
The worst global economic slump since the Great Depression led to a collapse in exports and domestic political conflict eroded confidence. ...

A really good piece. Worth reading.

I have no power, but I have given none to those who hold my debt. I guess it balances.

On the RGE Analyst’s EconoMonitor, Arpitha Bykere argues that the slower pace of job losses in the U.S. in April and May might be partly due to improving financial conditions but it hardly means that households and the economy are out of the woods. Large job losses of the past months and slower income growth will continue to weigh down on consumer spending as consumers have little access to other sources of finance – home equity or bank credit. Unemployment will also increase defaults on credit cards and loans thus exacerbating financial sector woes. Read Labor Market Has Become a Leading Indicator for the U.S. Economy.

Economic hell
Unemployment in the United States is already close to the 20% mark, company earnings are tumbling, yet share prices are buzzing along blissfully as if all is right in heaven - even as plastic card companies are going to cut US$2.7 trillion of credit. All right in heaven? This is economic hell!!!

6/11/2009
Mounting Deficits Spark US Economy Jitters
- Sydney Morning Herald 6/11/2009
Chinese Inv. Surges, Countering Export Slump
- Bloomberg 6/11/2009
China’s Commodity Buying Spree
- New York Times 6/11/2009
E-Mails Show Fed Strong-Armed B of A
- CNN Money 6/11/2009
Fed Lost $5.3B on Bear Stearns, AIG 1Q Holdings
- Los Angeles Times 6/11/2009
F'Closure Filings Top 300K as Bank Seizures Loom
- Bloomberg 6/11/2009
5 Jobless Workers Vie for Every Opening
- Orange County Register 6/11/2009
Lower Grain Supplies Could Mean Higher Food Prices
- Los Angeles Times 6/11/2009
Neiman to Cut Hours in Some Stores
- Chicago Tribune 6/11/2009
Southwest CEO Says June Looking Worse Than May
- Connecticut Post 6/11/2009
Auto-Lease Trading Business is Booming
- Denver Post

You want to know the truth?

- Annual Retail Sales Plunge Worst of Post-World War II Era
- May "Core" Monthly Retail Sales Gained 0.15% versus 0.46% Total
- Corrected Merchandise Trade Data Added $20 Billion to 2008 Deficit
- Annual Surge in Gross Federal Debt Nears $2 Trillion, Spiking Treasury Yields
http://www.shadowstats.com/ (only by subscription)

Two very important few liners:

The Fed defends the long term up trend line today on long bond issue using QE at today’s auction. That 28 year long bond up-trend-line will be defended by the Fed no matter the cost. I believe they would buy one trillion if they need to.

The World Health Organization declares a Flu Pandemic. Nobody really cares except those that will die in the Fall. This Flu will cull the gene pool. Anybody hear from the scientist that said this was a lab escape pandemic?

Alt A mortgages are hanging out to dry. They were in the main obtained on a declaration of assets paying interest only. Now they are resetting.

Foreclosure crisis spreads from subprime to prime mortgages
By Stephanie Armour, USA TODAY

The pace of prime borrowers going into foreclosure is accelerating, especially in states with mounting unemployment or property values that saw a big run-up during the housing boom.

It’s a marked shift from earlier this year, when foreclosures were driven by defaults on subprime loans. And it has major implications — ravaging the credit scores of borrowers who once had unblemished records and dragging down property values in more affluent neighborhoods.

It also threatens to undermine the housing recovery.

"It’s definitely a concern," says Brian Bethune at IHS Global Insight. "(Unemployment) is a major driver of foreclosures, and it will frustrate the housing recovery process."

In the first quarter, almost half of the overall increase in the start of foreclosures was due to the increase in prime, fixed-rate loans, according to the Mortgage Bankers Association (MBA). At the end of the fourth quarter, 2.4% of prime mortgages were seriously delinquent, more than double the 1.1% at the end of March 2008, according to a report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

More…

Nothing bad has happened so far, so this news is meaningless. Be careful drawing that conclusion. We are currently in uncharted waters for USA, Inc.

"The Formula"

US Fiscal Balance vs. US Dollar: Federal Government Budget As A % of GDP, 12 Month Moving Average:

The Federal budget, or total receipts less total outlays, divided by GDP defines “The Formula.” The Federal budget is normalized or divided by GDP to remove the effects of dollar devaluation and smoothed to provide unbiased historical comparisons. For example, -5% Formula reading in 1992 is largely comparable to the -5% Formula reading in 2008.

As stated previous on jsmineset.com, an economy is either rising at a rising rate or business activity is falling at an increasing rate. This is economic law 101. Falling business activity manifests itself as falling “Formula” values. Think of the Formula, Trade and Current Account Deficits as a speedometer of money flows in/out of the US. A negative speedometer in the "Formula" reading implies outflows. Ultimately, persistent outflows will send interest higher and devalue the dollar. For a detailed review of how the formula works: http://jsmineset.com/index.php/2009/02/08/jims-mailbox-74/



"Leading Formula"

Federal Taxes Withheld (TW) Less Total Government Outlays (TO) As A % of GDP, 12 Month Moving Average.

The leading formula is nothing more than a slight modification of the “Formula.” Tax withheld less outlays, divided by GDP defines the “Leading Formula.” Taxes withheld, a sub sector of total receipts, is more sensitive to marginal changes in business activity. This sensitivity of provides leading characteristic within the Formula calculation.





Federal Taxes Withheld 12-Month Moving Average (TW12MA) AND Federal taxes Withheld 12-Month Moving Average Year-over-Year Change (TW12MA12LN)



CIGA Eric

Why Current Depression Will Be Worse Than 1929