STOCK MARKET WATCH -- Friday, 11 September 2015

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Friday, 11 September 2015[font color=black][/font]

SMW for 10 September 2015

AT THE CLOSING BELL ON 10 September 2015
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Dow Jones 16,330.40 +76.83 (0.47%)
S&P 500 1,952.29 +10.25 (0.53%)
Nasdaq 4,796.25 +39.72 (0.84%)


[font color=red]10 Year 2.22% +0.02 (0.91%)
30 Year 2.99% +0.02 (0.67%) [font color=black]


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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
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[font color=black][font size=2]Handy Links - Essential Reading:[/font][/font]
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Matt Taibi: Secret and Lies of the Bailout


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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
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William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.
02/06/14 Matthew Martoma convicted of insider trading while at hedge fund SAC (Stephen A. Cohen) Capital Advisors. Expected sentence 7-10 years.
03/24/14 Annette Bongiorno, Bernard Madoff's secretary; Daniel Bonventre, director of operations for investments; JoAnn Crupi, an account manager; and Jerome O'Hara and George Perez, both computer programmers convicted of conspiracy to defraud clients, securities fraud, and falsifying the books and records.
05/19/14 Credit Suisse, which has an investment bank branch in NYC, agrees to plead guilty and pay appx. $2.6 billion penalties for helping wealthy Americans hide wealth and avoid taxes.
09/08/14 Matthew Martoma, convicted SAC trader, sentenced to 9 years in prison plus forfeiture of $9.3 million, including home and bank accounts
08/03/15 Former City (London) trader Tom Hayes found guilty of rigging global Libor interest rates. Each fo eight counts carries up to 10 yr. sentence.
08/21/15 Charles Antonucci Sr, former pres. Park Ave. Bank sentenced to 2.5 years in prison for bribery, fraud, embezzlement, and attempt to steal $11MM in TARP bailout funds, as well as $37.5MM fraud on OK insurance company. To pay $54MM in restitution and give up additional $11MM.







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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Demeter]

1. I have picked the last peaches from the tree

I estimate (because I was too dazzled to keep an accurate count) that this one little semi-dwarf tree, in its third year on site, produced 70 peaches, some small, like the ten peaches it produced the year I planted it, and some of a gourmet size, about 4 times a big.

I left one little peach on the tree, because it was too high for me to reach without the 10 foot ladder, which I didn't feel up to woman-handling (I'm still in recovery from the cold the Kid gave me). I peeled and sliced all but the 13 best perfect peaches.

Now to make pie crust...tomorrow. I am still recovering, and I cleaned house for inspection today. There's a limit, and I reached it. The congestion is about half gone....and I'm sleeping in a chair tonight because I can't lie down and still breathe.


I'm tempted to plant all the pits, and see if any sprout...this way lies madness, I know. But it's a waste to just throw them out.

Talk about a natural high! Next, pruning! For that, I simply will have to drag out the ladder. Or climb out the bedroom window, and prune it from the garage roof....

[DemReadingDU]

3. Yum, fresh peaches!

I'd be tempted to warm them up, sprinkle a bit of sugar on them, then add ice cream, for a quick delicious sundae!

When I had an apple tree, I was told to prune those in the late winter/early spring.
So peach trees get pruned in the fall?

[Demeter]

6. Well, if I do it now, it will get done

I didn't prune it at all yet and it's growing like Topsy.

Google results:

Summer Trims

Once the fruit arrives in summer, you can safely trim your peach trees for size. Pruning while the fruit is on the tree makes it easy to avoid sawing off fruitful branches. On the other hand, if you have too many fruits, you can trim away over-productive limbs -- an approach that keeps the trees' limited fruit well-fed.

Topping

Topping your peach trees in summer can make them easier to prune and keep them short. If you want to mow the tops of your peach trees, it's safest to wait until late winter or just after harvest in summer. This timing avoids the vulnerable periods, when winter chill can cause damage and spring pruning can shave off buds before they blossom.

This is what I need to do, before the damn tree is taller than two stories.

If you want to grow peach trees but have limited garden space, choose semi-dwarf varieties. The trees thrive in numerous temperate areas, including Mediterranean climates. They grow about two-thirds the size of standard-size peach trees, between 12 and 20 feet tall depending on the variety. A semi-dwarf peach tree lives about 15 to 20 years. These smaller peach trees produce fruit at a younger age than full-size trees.

Summer pruning stops the growth upward and encourages the branch strength so that branches support more fruit. I expect that's what I need....to stop the early drop of fruit and increase fruit size.

[DemReadingDU]

8. That upward growth gets out of control very quickly

For the amount of time that I spent pruning, spraying for insects and diseases, for NO harvest, we took out trees. Oh I did get lots of budding apples but they either all dropped from the tree or the frost killed the fruit. I think we had those trees 10 years, and never got any apples to eat.


It does sound like you are reaping a bumper crop of peaches this year.
Lucky you!

[Demeter]

2. Give Dr. Wolff a listen! He's got up to the minute news for us

[Demeter]

4. Global Economy Nearing a “Structural Recession” by Wolf Richter

http://wolfstreet.com/2015/09/10/global-economy-near-a-noncyclical-structural-recession/

And monetary policies will be “ineffective”

To the never-ending astonishment of our economists, global growth has been much weaker since the Financial Crisis than before it, despite enormous global stimulus from years of extreme central-bank monetary policies and record amounts of government deficit spending. This should not have happened, according to our economists. Fiscal stimulus and expansionary monetary policies beget economic growth, which beget even more economic growth. That’s the theory. And that’s precisely what hasn’t happened. All it did was inflate asset prices. But the global economy has been a dud.

“If we calculated global growth with China’s true growth rate and not the official rate, global growth in the second quarter of 2015 would be only 2%,” figured Natixis, the investment bank of France’s second largest megabank, Groupe BPCE.

This “sluggish growth, close to a recession, is due to persistent, structural causes; we therefore use the term ‘structural recession’ to show that it does not have a cyclical origin,” the report explained. It’s not caused by normal cyclical fluctuations, but by “persistent structural problems that are specific to each region.”

China loses its cost-competitiveness

The problem dogging China is the soaring cost of labor, in an economy that is still too centered on low-end products and exposed to “a very high level of the price elasticity of exports.” Thus, if Bangladesh or Vietnam can produce it a little more cheaply, China loses those exports. Labor costs have soared in the double digits year after year. Even per-unit labor cost, which compensates for productivity gains, has jumped year over year: in 2015, by 4.5%, which is at the low end; and by over 10% at the high end in 2000-2001 and 2007-2008. Hence a decline in exports of those products, a weakening of investments, and a sharp weakening of what Natixis calls China’s “true growth.”

Japan Inc. shortchanges its workers.

The main problem in Japan is “the excessive and virtually continuous distortion of income distribution at the expense of employees.” This shows up in the “frequent decline in real wages.” OK, that sounds like an American disease as well, and it is….Real per-capita wage growth in Japan has been negative year over year since 2013. From 1998 to 2012, there had been five significant periods with real wage declines. Yet per-capita productivity has continued to grow. And real GDP per working-age population has outgrown the rates in the US, the Eurozone, and the UK, as this chart from the Bank of International Settlements shows (blue line = Japan):



The Japanese are working hard and productively but are increasingly reduced to cheap labor by Japan Inc. The consequences of Abenomics, including a bout of inflation, have made this condition worse. If workers don’t make enough money, household demand is left twisting in the wind. Household demand moved in fits and starts. But on April 1, 2014, the consumption tax hike hit, and household demand plunged. It’s now merely 9% above where it had been 1998.

Emerging countries other than China suffer from bottlenecks.

Growth, and in particular industrial growth, in these countries has been “slowing down markedly.” Growth in manufacturing production has trended down ever since the V-shaped post-Financial Crisis recovery and has recently dipped into the negative. This has pushed GDP growth down into the 3% range. But these should be the fastest growing economies! The report blames “the many bottlenecks,” including a shortfall in sufficiently skilled workers, a shortage of energy production – with electricity production stagnating for the past 15 years – and sorely lacking transportation infrastructure.

Commodity exporters get squashed by plunging prices.

The plunge to multi-year lows in the prices of oil, natural gas (LNG), copper, iron ore, tin, gold, silver, and so on have hit each commodity-exporting country in its own way. They include Saudi Arabia and other OPEC countries, a number of African countries, Russia, Australia, and Canada. For commodity exporters as a group, GDP growth is now hovering at 2%, according to the report. But this might get worse: Russia is in a deep recession, Canada in a technical recession, and Australia looking increasingly shaky. Government revenues in many of these countries are based in part on the value of commodity exports. And if some of these countries have to grapple with their fiscal deficits in the future by cutting back government spending, growth will take another hit.

The US gets tripped up by energy sector horrors.

The collapse in oil and gas prices has caused companies directly and indirectly in the industry to cut back. Thus a “downturn in productive investment and industrial production as a whole,” which has weakened the economy further, even as GDP growth has been in the already lousy 2% range ever since the “recovery” from the Financial Crisis. But there is hope, the report found – the US being the only area where the report mentioned any signs of hope: “The second quarter figures nevertheless show that investment seems to be picking up.” OK, maybe just a glimmer.

Eurozone is mired in uncertainty and under-investment

The debt crisis has had consequences: falling investment “linked to excess indebtedness and uncertainty.” Public investment dropped from the range of 3.2%-3.5% of GDP before the Financial Crisis to 2.6%. Yet, government debt as a percent of GDP has continued to balloon in most Eurozone countries. Corporate investment has only been inching up over the last two years, after a steep decline, and remains substantially below where it had been before the Financial Crisis. And household investment in housing has plunged.

While the Eurozone emerged from its long recession, growth has been anemic, with GDP inching up at around 1% over the past two years. All these problems are structural, rather than cyclical, according to Natixis. They’re not part of the normal fluctuations that could be dealt with via stimulus programs or monetary policies. Natixis:

Expansionary monetary policies, although they are being used, are unable to pull the world out of this situation of structural recession.

Instead, these economies would have to attack their structural shortcomings. China would have to move up the value chain, which takes time and is painful. Japan would have to correct the “anomalies in income distribution” and pay workers more, which would make Japan Inc. less competitive and the elite less exuberant about Abenomics. Emerging countries other than China would need to invest money they don’t have in infrastructure and education. The Eurozone and other economies that are bogged down in too much debt would need to engage in “public and private sector deleveraging.”

That’s not happening. Instead, the reaction is “to use highly expansionary monetary policies to restore growth, which is ineffective, given the nature of the problems, and dangerous as it generates more excess liquidity.”

[Demeter]

5. My Money’s on Putin By Mike Whitney LAST YEAR

http://www.informationclearinghouse.info/article39391.htm

“History shows that the United States has benefited politically and economically from wars in Europe. The huge outflow of capital from Europe following the First and Second World Wars, transformed the U.S. into a superpower … Today, faced with economic decline, the US is trying to precipitate another European war to achieve the same objective.”

… Sergey Glazyev, Russian politician and economist

“The discovery of the world’s largest, known gas reserves in the Persian Gulf, shared by Qatar and Iran, and new assessments which found 70 percent more gas in the Levantine in 2007, are key to understanding the dynamics of the conflicts we see today. After a completion of the PARS pipeline, from Iran, through Iraq and Syria to the Eastern Mediterranean coast, the European Union would receive more than an estimated 45 percent of the gas it consumes over the next 100 – 120 years from Russian and Iranian sources. Under non-conflict circumstances, this would warrant an increased integration of the European, Russian and Iranian energy sectors and national economies.”

Christof Lehmann, Interview with Route Magazine

August 13, 2014 The United States' failed operation in Syria has led to an intensification of Washington’s proxy war in Ukraine. What the Obama administration hoped to achieve in Syria through its support of so called “moderate” Islamic militants was to topple the regime of Bashar al Assad, replace him with a US-backed puppet, and prevent the construction of the critical Iran-Iraq-Syria pipeline. That plan hasn’t succeeded nor will it in the near future, which means that the plan for the prospective pipeline will eventually go forward.

Why is that a problem?

It’s a problem because–according to Dr. Lehmann–”Together with the Russian gas… the EU would be able to cover some 50 percent of its requirements for natural gas via Iranian and Russian sources.” As the primary suppliers of critical resources to Europe, Moscow and Tehran would grow stronger both economically and politically which would significantly undermine the influence of the US and its allies in the region, particularly Qatar and Israel. This is why opponents of the pipeline developed a plan to sabotage the project by fomenting a civil war in Syria. Here’s Lehmann again:

“In 2007, Qatar sent USD 10 billion to Turkey´s Foreign Minister Davotoglu to prepare Turkey´s and Syria´s Muslim Brotherhood for the subversion of Syria. As we recently learned from former French Foreign Minister Dumas, it was also about that time, that actors in the United Kingdom began planning the subversion of Syria with the help of “rebels”’ (Christof Lehmann, Interview with Route Magazine)

In other words, the idea to arm, train and fund an army of jihadi militants, to oust al Assad and open up Syria to western interests, had its origins in an evolving energy picture that clearly tilted in the favor of US rivals in the region. (Note: We’re not sure why Lehmann leaves out Saudi Arabia, Kuwait or the other Gulf States that have also been implicated.)

Lehmann’s thesis is supported by other analysts including the Guardian’s Nafeez Ahmed who explains what was going on behind the scenes of the fake civil uprising in Syria. Here’s a clip from an article by Ahmed titled “Syria intervention plan fueled by oil interests, not chemical weapon concern”:

“In May 2007, a presidential finding revealed that Bush had authorised CIA operations against Iran. Anti-Syria operations were also in full swing around this time as part of this covert programme, according to Seymour Hersh in the New Yorker. A range of US government and intelligence sources told him that the Bush administration had “cooperated with Saudi Arabia’s government, which is Sunni, in clandestine operations” intended to weaken the Shi’ite Hezbollah in Lebanon. “The US has also taken part in clandestine operations aimed at Iran and its ally Syria,” wrote Hersh, “a byproduct” of which is “the bolstering of Sunni extremist groups” hostile to the United States and “sympathetic to al-Qaeda.” He noted that “the Saudi government, with Washington’s approval, would provide funds and logistical aid to weaken the government of President Bashir Assad, of Syria”…

According to former French foreign minister Roland Dumas, Britain had planned covert action in Syria as early as 2009: “I was in England two years before the violence in Syria on other business”, he told French television:

“I met with top British officials, who confessed to me that they were preparing something in Syria. This was in Britain not in America. Britain was preparing gunmen to invade Syria.”
… Leaked emails from the private intelligence firm Stratfor including notes from a meeting with Pentagon officials confirmed US-UK training of Syrian opposition forces since 2011 aimed at eliciting “collapse” of Assad’s regime “from within.”

So what was this unfolding strategy to undermine Syria and Iran all about? According to retired NATO Secretary General Wesley Clark, a memo from the Office of the US Secretary of Defense just a few weeks after 9/11 revealed plans to “attack and destroy the governments in 7 countries in five years”, starting with Iraq and moving on to “Syria, Lebanon, Libya, Somalia, Sudan and Iran.” In a subsequent interview, Clark argues that this strategy is fundamentally about control of the region’s vast oil and gas resources.”

(“Syria intervention plan fueled by oil interests, not chemical weapon concern“, The Guardian)

Apparently, Assad was approached by Qatar on the pipeline issue in 2009, but he refused to cooperate in order “to protect the interests of his Russian ally.” Had Assad fallen in line and agreed to Qatar’s offer, then the effort to remove him from office probably would have been called off. In any event, it was the developments in Syria that triggered the frenzied reaction in Ukraine. According to Lehmann:

“The war in Ukraine became predictable (unavoidable?) when the great Muslim Brotherhood Project in Syria failed during the summer of 2012. …In June and July 2012 some 20,000 NATO mercenaries who had been recruited and trained in Libya and then staged in the Jordanian border town Al-Mafraq, launched two massive campaigns aimed at seizing the Syrian city of Aleppo. Both campaigns failed and the ”Libyan Brigade” was literally wiped out by the Syrian Arab Army.

It was after this decisive defeat that Saudi Arabia began a massive campaign for the recruitment of jihadi fighters via the network of the Muslim Brotherhoods evil twin sister Al-Qaeda.

The International Crisis Group responded by publishing its report ”Tentative Jihad”. Washington had to make an attempt to distance itself ”politically” from the ”extremists”. Plan B, the chemical weapons plan was hedged but it became obvious that the war on Syria was not winnable anymore.”

(“The Atlantic Axis and the Making of a War in Ukraine“, New eastern Outlook)

There were other factors that pushed the US towards a conflagration with Moscow in Ukraine, but the driving force was the fact that US rivals (Russia and Iran) stood to be the dominant players in an energy war that would increasingly erode Washington’s power. Further economic integration between Europe and Russia poses a direct threat to US plans to pivot to Asia, deploy NATO to Russia’s borders, and to continue to denominate global energy supplies in US dollars.

Lehmann notes that he had a conversation with “a top-NATO admiral from a northern European country” who clarified the situation in a terse, two-sentence summary of US foreign policy. He said:

“American colleagues at the Pentagon told me, unequivocally, that the US and UK never would allow European – Soviet relations to develop to such a degree that they would challenge the US/UK’s political, economic or military primacy and hegemony on the European continent. Such a development will be prevented by all necessary means, if necessary by provoking a war in central Europe”.

This is the crux of the issue. The United States is not going to allow any state or combination of states to challenge its dominance. Washington doesn’t want rivals. It wants to be the undisputed, global superpower, which is the point that Paul Wolfowitz articulated in an early draft of the US National Defense Strategy:

“Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union. This is a dominant consideration underlying the new regional defense strategy and requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power.”

So the Obama administration is going to do whatever it thinks is necessary to stop further EU-Russia economic integration and to preserve the petrodollar system. That system originated in 1974 when President Richard Nixon persuaded OPEC members to denominate their oil exclusively in dollars, and to recycle their surplus oil proceeds into U.S. Treasuries. The arrangement turned out to be a huge windfall for the US, which rakes in more than $1 billion per day via the process. This, in turn, allows the US to over-consume and run hefty deficits. Other nations must stockpile dollars to purchase the energy that runs their machinery, heats their homes and fuels their vehicles. Meanwhile, the US can breezily exchange paper currency, which it can print at no-expense to itself, for valuable imported goods that cost dearly in terms of labor and materials. These dollars then go into purchasing oil or natural gas, the profits of which are then recycled back into USTs or other dollar-denominated assets such as U.S. stocks, bonds, real estate, or ETFs. This is the virtuous circle that keeps the US in the top spot.

As one critic put it: “World trade is now a game in which the US produces dollars and the rest of the world produces things that dollars can buy.”

The petrodollar system helps to maintain the dollar’s monopoly pricing which, in turn, sustains the dollar as the world’s reserve currency. It creates excessive demand for dollars which allows the Fed to expand the nation’s credit by dramatically reducing the cost of financing. If oil and natural gas were no longer denominated in USDs, the value of the dollar would fall sharply, the bond market would collapse, and the US economy would slip into a long-term slump. This is one of the reasons why the US invaded Iraq shortly after Saddam had switched over to the euro; because it considers any challenge to the petrodollar looting scam as a direct threat to US national security.

Moscow is aware of Washington’s Achilles’s heel and is making every effort to exploit that weakness by reducing its use of the dollar in its trade agreements. So far, Moscow has persuaded China and Iran to drop the dollar in their bilateral dealings, and they have found that other trading partners are eager to do the same. Recently, Russian economic ministers conducted a “de-dollarization” meeting in which a “currency switch executive order” was issued stating that “the government has the legal power to force Russian companies to trade a percentage of certain goods in rubles.”

Last week, according to RT:

“The Russian and Chinese central banks have agreed a draft currency swap agreement, which will allow them to increase trade in domestic currencies and cut the dependence on the US dollar in bilateral payments. “The draft document between the Central Bank of Russia and the People’s Bank of China on national currency swaps has been agreed by the parties…..The agreement will stimulate further development of direct trade in yuan and rubles on the domestic foreign exchange markets of Russia and China,” the Russian regulator said.

Currently, over 75 percent of payments in Russia-China trade settlements are made in US dollars, according to Rossiyskaya Gazeta newspaper.”

(“De-Dollarization Accelerates – China/Russia Complete Currency Swap Agreement“, Zero Hedge)

The attack on the petrodollar recycling system is one of many asymmetrical strategies Moscow is presently employing to discourage US aggression, to defend its sovereignty, and to promote a multi-polar world order where the rule of law prevails. The Kremlin is also pushing for institutional changes that will help to level the playing field instead of creating an unfair advantage for the richer countries like the US. Naturally, replacing the IMF, whose exploitative loans and punitive policies, topped the list for most of the emerging market nations, particularly the BRICS (Brazil, Russia, India, China and South Africa) who, in July, agreed to create a $100 billion Development Bank that will “will counter the influence of Western-based lending institutions and the dollar. The new bank will provide money for infrastructure and development projects in BRICS countries, and unlike the IMF or World Bank, each nation has equal say, regardless of GDP size.

According to RT:

“The big launch of the BRICS bank is seen as a first step to break the dominance of the US dollar in global trade, as well as dollar-backed institutions such as the International Monetary Fund (IMF) and the World Bank, both US-based institutions BRICS countries have little influence within…

“This mechanism creates the foundation for an effective protection of our national economies from a crisis in financial markets,” Russian President Vladimir Putin said.”

(“BRICS establish $100bn bank and currency pool to cut out Western dominance“, RT)

It’s clear that Washington’s aggression in Ukraine has focused Moscow’s attention on retaliation. But rather than confront the US militarily, as Obama and Co. would prefer, Putin is taking aim at the vulnerabilities within the system. A BRICS Development Bank challenges the IMF’s dominant role as lender of last resort, a role that has enhanced the power of the wealthy countries and their industries. The new bank creates the basis for real institutional change, albeit, still within the pervasive capitalist framework.

Russian politician and economist, Sergei Glazyev, summarized Moscow’s approach to the US-Russia conflagration in an essay titled “US is militarizing Ukraine to invade Russia.” Here’s an excerpt:

“To stop the war, you need to terminate its driving forces. At this stage, the war unfolds mainly in the planes of economic, public relations and politics. All the power of US economic superiority is based on the financial pyramid of debt, and this has gone long beyond sustainability. Its major lenders are collapsing enough to deprive the US market of accumulated US dollars and Treasury bonds. Of course, the collapse of the US financial system will cause serious losses to all holders of US currency and securities. But first, these losses for Russia, Europe and China will be less than the losses caused by American geopolitics unleashing another world war. Secondly, the sooner the exit from the financial obligations of this American pyramid, the less will be the losses. Third, the collapse of the dollar Ponzi scheme gives an opportunity, finally, to reform the global financial system on the basis of equity and mutual benefit.”

Washington thinks “modern warfare” involves covert support for proxy armies comprised of Neo Nazis and Islamic extremists. Moscow thinks modern warfare means undermining the enemy’s ability to wage war through sustained attacks on it’s currency, its institutions, its bond market, and its ability to convince its allies that it is a responsible steward of the global economic system.

I’ll put my money on Russia.

Mike Whitney lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at [e-mail].

[Demeter]

7. birth of a new financial-economic system: The example of Russia and Argentina By The Saker

http://www.informationclearinghouse.info/article39394.htm

August 13, 2014 - Thanks to the lightning fast work of the Russian Team (thanks guys!!!) I can share with you a report from the Russian TV channel Rossia 1 which I find absolutely fascinating. It shows how Russia and Argentina have been literally pushed by the USA into working with each other and the kind of results this collaboration is achieving. Though this report focuses on Argentina, I am sure that the same phenomenon is taking place elsewhere, especially amongst the BRICS countries.

It is very hard to change a system which works, a system upon which people depend for their salaries, a system which has been stable for years and which, while not perfect, at least is understood by all parties. This is why for all its imperfections, sometimes bordering on dysfunctions, what I would call the "Western financial-economic system" was so important and, frankly, so attractive: it was there and it worked. But then the USA did something extremely dangerous: they began to use and abuse this system for their very narrow political goals: MasterCard, Visa and the rest of them suddenly dropped Wikileaks, Iran was excluded from SWIFT, the French were told to be billions to Uncle Sam because of the Mistral sales to Russia, the Russians were told to compensate Khodorkovsky, the Swiss were blackmailed into given up their traditional banking secrecy, etc.

Of course, the dollar and the western economic interests did not only attract with a tasty carrot. They also came with a big stick: the US military. But at the same time when the US began using and abusing the Western financial-economic system, they also began a long streak of lost wars. In reality, one could make the case that the USA did not win a single war against a meaningful opponent since 1945 or Korea, but thanks to Hollywood and the Cold War the US still could maintain the illusion of being a military hyper-power. But following 9/11 even that illusion began to go down the tubes following the disasters in Iraq and Afghanistan (and Israel's abject defeat against Hezbollah).

As a result of the double collapse of the appeal of the Western financial-economic system and of the deterrence of the US military power the rest of the planet began to realize that one could openly defy Uncle Sam and get away with it. Oh sure, Bolivia alone could not do it. Neither could Malaysia. But, lead by the BRICS themselves probably inspired by the ALBA countries, more and more countries came to realize this basic truth: to be an ally of the USA might well be even worse then to openly defy them.

Of course, at this current moment in history, Russia and Argentina are, really, battling for their very survival so it is not surprising that they would be showing the most determination into setting up a new, USA & dollar free economic-financial system. But the absolutely irresponsible and, frankly, crazy behavior of the USA in the past years is, I believe, also scaring the rest of the planet and there is no doubt in my mind that the example of Argentina and Russia is just the tip of a much bigger iceberg. First and foremost, we have the de-facto alliance of China and Russia, the biggest economic power on the planet with the biggest military power. They, in turn, as supported by the BRICS, CSTO, EAEC, SCO, ALBA, Mercosur and many other regional organizations which, in one way or another, federate the 100 or so nations which did not vote with the AngloZionist Empire at the UN on the Ukrainian issue.

The bottom line is this: very few nations are still attracted to the AngloZionist imperial model, and very few are still frightened by it. The result is the kind of collaboration (never shown on the MSM, of course) which you can see in this report. Enjoy!

[Demeter]

9. Cry for Argentina: Fiscal Mismanagement, Odious Debt or Pillage? By Ellen Brown

http://www.informationclearinghouse.info/article39390.htm

August 13, 2014 - Argentina has now taken the US to The Hague for blocking the country’s 2005 settlement with the bulk of its creditors. The issue underscores the need for an international mechanism for nations to go bankrupt. Better yet would be a sustainable global monetary scheme that avoids the need for sovereign bankruptcy.

Argentina was the richest country in Latin America before decades of neoliberal and IMF-imposed economic policies drowned it in debt. A severe crisis in 2001 plunged it into the largest sovereign debt default in history. In 2005, it renegotiated its debt with most of its creditors at a 70% “haircut.” But the opportunist “vulture funds,” which had bought Argentine debt at distressed prices, held out for 100 cents on the dollar...Paul Singer’s Elliott Management has spent over a decade aggressively trying to force Argentina to pay down nearly $1.3 billion in sovereign debt. Elliott would get about $300 million for bonds that Argentina claims it picked up for $48 million. Where most creditors have accepted payment at a 70% loss, Elliott Management would thus get a 600% return.

In June 2014, the US Supreme Court declined to hear an appeal of a New York court’s order blocking payment to the other creditors until the vulture funds had been paid. That action propelled Argentina into default for the second time in this century – and the eighth time since 1827. On August 7, 2014, Argentina asked the International Court of Justice in the Hague to take action against the United States over the dispute.

Who is at fault? The global financial press blames Argentina’s own fiscal mismanagement, but Argentina maintains that it is willing and able to pay its other creditors. The fault lies rather with the vulture funds and the US court system, which insist on an extortionate payout even if it means jeopardizing the international resolution mechanism for insolvent countries. If creditors know that a few holdout vultures can trigger a default, they are unlikely to settle with other insolvent nations in the future. Blame has also been laid at the feet of the IMF and the international banking system for failing to come up with a fair resolution mechanism for countries that go bankrupt. And at a more fundamental level, blame lies with a global debt-based monetary scheme that forces bankruptcy on some nations as a mathematical necessity. As in a game of musical chairs, some players must default...Most money today comes into circulation in the form of bank credit or debt. Debt at interest always grows faster than the money supply, since more is always owed back than was created in the original loan. There is never enough money to go around without adding to the debt burden. As economist Michael Hudson points out, the debt overhang grows exponentially until it becomes impossible to repay. The country is then forced to default.

Fiscal Mismanagement or Odious Debt?

Besides impossibility of performance, there is another defense Argentina could raise in international court – that of “odious debt.” Also known as illegitimate debt, this legal theory holds that national debt incurred by a regime for purposes that do not serve the best interests of the nation should not be enforceable. The defense has been used successfully by a number of countries, including Ecuador in December 2008, when President Rafael Correa declared that its debt had been contracted by corrupt and despotic prior regimes. The odious-debt defense allowed Ecuador to reduce the sum owed by 70%...In a compelling article in Global Research in November 2006, Adrian Salbuchi made a similar case for Argentina. He traced the country’s problems back to 1976, when its foreign debt was just under US$6 billion and represented only a small portion of the country’s GDP. In that year:

An illegal and de facto military-civilian regime ousted the constitutionally elected government of president María Isabel Martínez de Perón [and] named as economy minister, José Martinez de Hoz, who had close ties with, and the respect of, powerful international private banking interests. With the Junta’s full backing, he systematically implemented a series of highly destructive, speculative, illegitimate – even illegal – economic and financial policies and legislation, which increased Public Debt almost eightfold to US$ 46 billion in a few short years. This intimately tied-in to the interests of major international banking and oil circles which, at that time, needed to urgently re-cycle huge volumes of “Petrodollars” generated by the 1973 and 1979 Oil Crises. Those capital in-flows were not invested in industrial production or infrastructure, but rather were used to fuel speculation in local financial markets by local and international banks and traders who were able to take advantage of very high local interest rates in Argentine Pesos tied to stable and unrealistic medium-term US Dollar exchange rates.

Salbuchi detailed Argentina’s fall from there into what became a $200 billion debt trap. Large tranches of this debt, he maintained, were “odious debt” and should not have to be paid:

Making the Argentine State – i.e., the people of Argentina – weather the full brunt of this storm is tantamount to financial genocide and terrorism. . . . The people of Argentina are presently undergoing severe hardship with over 50% of the population submerged in poverty . . . . Basic universal law gives the Argentine people the right to legitimately defend their interests against the various multinational and supranational players which, abusing the huge power that they wield, directly and/or indirectly imposed complex actions and strategies leading to the Public Debt problem.

Of President Nestor Kirchner’s surprise 2006 payment of the full $10 billion owed to the IMF, Salbuchi wrote cynically:

This key institution was instrumental in promoting and auditing the macroeconomic policies of the Argentine Government for decades. . . . Many analysts consider that . . . the IMF was to Argentina what Arthur Andersen was to Enron, the difference being that Andersen was dissolved and closed down, whilst the IMF continues preaching its misconceived doctrines and exerts leverage. . . . [T]he IMF’s primary purpose is to exert political pressure on indebted governments, acting as a veritable coercing agency on behalf of major international banks.

Sovereign Bankruptcy and the “Global Economic Reset”

Needless to say, the IMF was not closed down. Rather, it has gone on to become the international regulator of sovereign debt, which has reached crisis levels globally. Total debt, public and private, has grown by over 40% since 2007, to $100 trillion. The US national debt alone has grown from $10 trillion in 2008 to over $17.6 trillion today.

At the World Economic Forum in Davos in January 2014, IMF Managing Director Christine Lagarde spoke of the need for a global economic “reset.” National debts have to be “reset” or “readjusted” periodically so that creditors can keep collecting on their exponentially growing interest claims, in a global financial scheme based on credit created privately by banks and lent at interest. More interest-bearing debt must continually be incurred, until debt overwhelms the system and it again needs to be reset to keep the usury game going. Sovereign debt (or national) in particular needs periodic “resets,” because unlike for individuals and corporations, there is no legal mechanism for countries to go bankrupt. Individuals and corporations have assets that can be liquidated by a bankruptcy court and distributed equitably to creditors. But countries cannot be liquidated and sold off – except by IMF-style “structural readjustment,” which can force the sale of national assets at fire sale prices.

A Sovereign Debt Restructuring Mechanism ( SDRM) was proposed by the IMF in the early 2000s, but it was quickly killed by Wall Street and the U.S. Treasury. The IMF is working on a new version of the SDRM, but critics say it could be more destabilizing than the earlier version. Meanwhile, the IMF has backed collective action clauses (CACs) designed to allow a country to negotiate with most of its creditors in a way that generally brings all of them into the net. But CACs can be challenged, and that is what happened in the case of the latest Argentine bankruptcy. According to Harvard Professor Jeffrey Frankel:

The US court rulings’ indulgence of a parochial instinct to enforce written contracts will undermine the possibility of negotiated restructuring in future debt crises.

We are back, he says, to square one.

Better than redesigning the sovereign bankruptcy mechanism might be to redesign the global monetary scheme in a way that avoids the continual need for a bankruptcy mechanism. A government does not need to borrow its money supply from private banks that create it as credit on their books. A sovereign government can issue its own currency, debt-free. But that interesting topic must wait for a follow-up article. Stay tuned.

Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her 200+ blog articles are at EllenBrown.com.

[Demeter]

10. TODAY: Argentina hails UN vote on sovereign debt restructuring

http://www.bbc.com/news/world-latin-america-34217115

Argentina has welcomed a UN resolution creating a new global framework for sovereign debt restructuring... The UN said countries should protect governments from minority creditors who refuse to go along with the majority in mutually agreed debt restructuring...Foreign Minister Hector Timerman said it was a resolution for economic stability, peace and development.

Argentina defaulted in 2001. The hedge funds scooped up its bonds at a fraction of the price and have since won US court backing to claim full payment. Argentina struck repayment deals in 2005 and 2010 with more than 90% of its creditors...Argentina has been fighting US hedge funds who are demanding full payment on defaulted bonds. The hedge funds had refused to go along with the majority of the country's creditors and accept a restructuring deal.

The government argues that if it pays the hedge funds the full amount, it would undermine the basis for the repayment deals struck with its other creditors.

Some Caribbean countries have faced the same problem as Argentina.

[Demeter]

11. Justice Department Sets Sights on Wall Street Executives By MATT APUZZO and BEN PROTESS

http://www.nytimes.com/2015/09/10/us/politics/new-justice-dept-rules-aimed-at-prosecuting-corporate-executives.html

Stung by years of criticism that it has coddled Wall Street criminals, the Justice Department issued new policies on Wednesday that prioritize the prosecution of individual employees — not just their companies — and put pressure on corporations to turn over evidence against their executives.

The new rules, issued in a memo to federal prosecutors nationwide, are the first major policy announcement by Attorney General Loretta E. Lynch since she took office in April. The memo is a tacit acknowledgment of criticism that despite securing record fines from major corporations, the Justice Department under President Obama has punished few executives involved in the housing crisis, the financial meltdown and corporate scandals.

“Corporations can only commit crimes through flesh-and-blood people,” Sally Q. Yates, the deputy attorney general and the author of the memo, said in an interview on Wednesday. “It’s only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom.”

Though limited in reach, the memo could erase some barriers to prosecuting corporate employees and inject new life into these high-profile investigations. The Justice Department often targets companies themselves and turns its eyes toward individuals only after negotiating a corporate settlement. In many cases, that means the offending employees go unpunished...


I AM WATCHING TO SEE IF OBAMA TRIES TO TAKE CREDIT FOR THIS CHANGE OF HIS AND ERIC HOLDER'S POLICY....

[Demeter]

12. New York seeks info from banks in Treasury auction probe

HERE WE GO AGAIN...ANOTHER MARKET RIGGED

http://www.reuters.com/article/2015/09/09/globalbanks-probe-idUSL1N11F0XO20150909

A New York state regulator has sought information from banks including Barclays Plc, Deutsche Bank AG, Goldman Sachs Group Inc, Societe Generale, and Credit Suisse Group AG on potential manipulation of U.S. Treasury auctions, according to a person familiar with the matter. The New York Department of Financial Services sent letters to the banks in early August, seeking information on their operations related to Treasury auctions, the person said, adding that the letters do not necessarily indicate wrongdoing by the banks...All the banks are primary dealers in the $12.5 trillion Treasury market, authorized to transact directly with the Federal Reserve...

The Financial Times, citing sources, reported that the letters contained general questions and that the probe was in early stages with no focus on any particular bank. (on.ft.com/1JSDKww) ...It was not clear exactly what activity in the Treasury market the regulator is investigating. In June, the U.S. Department of Justice also was reported to be looking into the Treasury market. The Justice Department, New York Department of Financial Services and representatives of the banks declined to comment on Wednesday.


****************************
In July, 22 primary dealers including major banks were sued by the State-Boston Retirement System, the pension fund for Boston public employees, in a U.S. federal court in a nationwide class action suit alleging a conspiracy to manipulate Treasury auctions.

Credit Suisse, Deutsche Bank, Goldman Sachs, Bank of America Corp's Merrill Lynch unit, Citigroup Inc, HSBC Holdings Plc, JPMorgan Chase & Co and UBS AG were among the banks that were sued.

***********************************************

The activities of a lesser-known hedge fund, Element Capital Management LLC, have caught the attention of the Treasury Department, the Wall Street Journal reported on Tuesday. (on.wsj.com/1LUZsTi) The fund has been the largest bidder in nearly all of the 62 Treasury note and bond auctions in November-July, many of which involved sales of over $30 billion of debt, the Journal reported, citing people familiar with the matter. Element's activity has raised questions because its cumulative purchases far exceed its $6 billion in assets under management, the Journal said.

"Consistent with our policy, Treasury does not comment on individual investors in Treasury auctions or conversations with market participants," Treasury spokesman Adam Hodge said on Wednesday.


ARE THERE ANY MARKETS THAT HAVEN'T BEEN RIGGED?

[Demeter]

13. Debt collectors ordered to refund millions to consumers

http://money.cnn.com/2015/09/09/pf/cfpb-action-debt-collectors/index.html?section=money_pf

The two largest debt collectors in the country are refunding millions of dollars to customers over allegations they used deceptive practices to collect bad debts.

The Consumer Financial Protection Bureau charged that Encore Capital Group and Portfolio Recovery Associates bought potentially inaccurate debt, attempted to collect unverified debts and used illegal litigation practices to collect debts.

"Encore and Portfolio Recovery Associates threatened and deceived consumers to collect on debts they should have known were inaccurate or had other problems," said CFPB Director Richard Cordray in a release Wednesday.

The companies buy outstanding debts from creditors at highly-reduced rates and then attempt to collect on them. According to the CFPB, the companies have purchased the rights to collect more than $200 billion in various defaulted consumer debts.

MORE

[Demeter]

14. Nomi Prins: Mexico, Federal Reserve Policy and Danger Ahead for Emerging Markets

http://www.nomiprins.com/thoughts/2015/9/9/mexico-federal-reserve-policy-and-danger-ahead-for-emerging.html

By Nomi Prins, a former Wall Street executive, the author of six books, a speaker, and a distinguished senior fellow at the non-partisan public policy institute Demos. Her most recent book, All the Presidents’ Bankers: The Hidden Alliances that Drive American Power (Nation Books) has just been released in paperback and this piece is adapted and updated from it.


On August 27th, I had the opportunity to address the Aspen Institute, UNIFIMEX and PWC in Mexico City during a Q&A with Patricia Armendariz. Subsequenty, on August 28th, I gave the opening talk at the annual IMEF conference. The main issues of concern to local Mexican banks, as well as to Mexico’s central bank, are:

1) How the Federal Reserve’s (and to a lesser extent ECB’s and People’s Bank of China) policies and actions have, and wlil continue to impact their currency and interest rate levels, and

2) The risks posed by the structural, and ongoing problems of too-big-to-fail banks, which remain as much a US as a Mexican problem as manifested by heightened economic, market and financial stress.

I posted the slides from my talk here, including the ten main risks that Mexico (and really all countries) are facing today, as well as the four factors of volatility that I have spoke about many times before. Much uncertainly emanates from central bank policy and the associated artificial stimulation of mega banking institutions and capital markets throughout the world. There is no foreseeable remedy to the long-term damage already caused, and that will continue to grow in the future.

What follows is a related piece that I co-authored with researcher, Craig Wilson that first appeared in Peak Prosperity:

http://www.peakprosperity.com/blog/94048/trouble-south-border

What This All Means

This level of global inter-connected financial risk is hazardous in Mexico, where it’s peppered by high bank concentration risk. No one wants another major financial crisis. Yet, that’s where we are headed absent major reconstructions of the banking framework and the central bank policies that exude extreme power over global economies and markets, in the US, Mexico, and throughout the world.

Mexico’s problems could again ripple through Latin America where eroding confidence, volatility, and US dollar strength are already hurting economies and markets.

The difference is that now, in contrast to the 1980s and 1990s debt crises, loan and bond amounts have not just been extended by private banks, but subsidized by the Fed and the ECB. The risk platform is elevated. The fall, for both Mexico and its trading partners like the US, likely much harder.

[Demeter]

15. Al Qaeda Mag Urges Attack on Koch Brothers, Buffett, Bloomberg

http://www.nbcnews.com/business/economy/al-qaeda-mag-urges-attack-koch-brothers-buffett-bloomberg-n424386

A notorious al Qaeda magazine is encouraging lone-wolf terrorist attacks on U.S. economic leaders, including Bill Gates, Michael Bloomberg and Warren Buffett.

The list in Inspire magazine also included industrialist brothers Charles and David Koch, internet entrepreneur Larry Ellison, and casino magnate Sheldon Adelson. A prominent economist was also on the list but asked that his name be withheld. Federal Reserve chairman Ben Bernanke was named, though not Janet Yellen, who succeeded him.

Also pictured was Jim Walton, one of the heirs to the Wal-Mart fortune, although he was misidentified in the caption as his late father, Sam Walton. Several other names on the list were misspelled.

MORE

[Demeter]

16. Housing Shift: Big Investors Snap Up New Homes for Use as Rentals

NOW THAT'S JUST PERVERSE

http://www.nbcnews.com/business/real-estate/housing-shift-big-investors-snap-new-homes-use-rentals-n425166

It was widely deemed a temporary play: Large-scale investors buying thousands of discounted foreclosed properties during the worst of the housing crash and turning them into single-family rentals. When home prices recovered, they would surely sell them for a hefty profit. The housing market is recovering, albeit more slowly than expected. Foreclosure volume is way down and home prices are way up, but these investors are not selling.

They are buying more, and now they are buying new.

"I actually think that we're coming into perhaps the most compelling three or four years that I've seen since I've been in the business," said Doug Brien, CEO of Starwood Waypoint Residential Trust. Brien, standing in front of one of his company's rental homes in a brand-new housing development in Lawrenceville, Georgia, near Atlanta, says builders are the next frontier for institutional investors.

"For us operationally, being able to have a brand-new home that typically has a warranty, that works well for us. We can also customize floor plans that work for the business," added Brien.

MORE

[Demeter]

17. JOLTS Report is Evidence of an Economy Moving Sideways

OR MAYBE, SPINNING DOWNWARDS, IN AN EVER-WIDENING DEATH SPIRAL?

http://www.epi.org/blog/jolts-report-is-evidence-of-an-economy-moving-sideways/



Today’s Job Openings and Labor Turnover Survey (JOLTS) report corroborates last week’s jobs report, which continued to provide evidence that the economy is at best moving at a slow jog, with meager wage growth and employment growth that’s just keeping up with the growth in the working age population. The rate of job openings increased in July, while the hires rate fell and the quits rate remains depressed.

There continues to be a significant gap between the number of people looking for jobs and the number of job openings. The figure below illustrates the overall improvement in the economy over the last five years, as the unemployment level continues to fall and job openings rise. In a tighter economy (like the one shown in the initial year of data), these levels would be much closer together. So it’s clear that there is still a significant amount slack in the economy. Furthermore, on top of the 8+ million unemployed workers warming the bench, there are still more than three million workers sitting in the stands with little hope to even get in the game.

CAN'T GET THE GRAPHS--THEY ARE INTERACTIVE--SEE LINK

Meanwhile, the figure below shows the hires, quits, and layoff rates through July 2015. The layoff rate shot up during the recession but recovered quickly and has been at pre-recession levels for more than three years. The fact that this trend continued in July is a good sign. That said, not only do layoffs need to come down before we see a full recovery in the labor market, but hiring also needs to pick up–the hires rate dipped slightly in July, and is still below where it was at the end of 2014.

The voluntary quits rate held steady at 1.9 percent in July, where it has sat for most of the last six months as workers continue to be stuck in jobs that they would leave if they could. In July, the quits rate was still 9.2 percent lower than it was in 2007, before the recession began. A larger number of people voluntarily quitting their jobs would indicate a strong labor market—one in which workers are able to leave jobs that are not right for them and find new ones. Before long, we should look for a return to pre-recession levels of voluntary quits, which would mean that fewer workers are locked into jobs they would leave if they could. But, as with previous months, we are not there yet.

In this month’s JOLTS report, there do appear to be early signs of some sectoral tightening. Last year at this time, there were more unemployed workers than job openings in every sector. As you can see in the figure below, some sectors have seen improvements, particularly health care and social assistance. This within-sector tightening is a small sign of good news, but other sectors have seen little-to-no improvement in their job-seekers-to-job-openings ratio. There are, for example still 47 unemployed construction workers for every 10 constructions jobs. In other words, despite claims from some employers, there is no shortage of construction workers. (Of course, unemployed workers in one sector can sometimes find a job in a different sector, but the disproportionate numbers of job seekers in some sectors is still troubling.)

Note: Because the data are not seasonally adjusted, these are 12-month averages, August 2014–July 2015.

In fact, while the market does appear to be improving for some types of unemployed workers, there are no significant worker shortages anywhere in the economy. While there has been a clear progress, it is also important to remember that a job opening when the labor market is weak often does not mean the same thing as a job opening when the labor market is strong. There is a wide range of “recruitment intensity” a company can put behind a job opening. If a firm is trying hard to fill an opening, it may increase the compensation package and/or scale back the required qualifications. On the other hand, if it is not trying very hard, it might hike up the required qualifications and/or offer a meager compensation package. Perhaps unsurprisingly, research shows that recruitment intensity is cyclical—it tends to be stronger when the labor market is strong, and weaker when the labor market is weak. This means that when a job opening goes unfilled and the labor market is weak, as it is today, companies may very well be holding out for an overly-qualified candidate at a cheap price.

Taken as a whole, these numbers demonstrate that the main problem in the labor market is a broad-based lack of demand for workers—not available workers lacking the skills needed for the sectors with job openings. This morning’s JOLTS report is further evidence that the economy has ways to go before it can be considered healthy. With Congress gridlocked, the most important policy lever we have at our disposal is interest rates controlled by the Federal Reserve. Given the evidence, when the Federal Open Market Committee meets later this month, they should continue to let the economy grow, and not do anything to slow down our recovery.

[Demeter]

18. Brazil cut to 'junk' credit rating by Standard & Poor's

http://www.bbc.com/news/business-34205558

Brazil has lost its investment-grade credit rating following a downgrade by Standard & Poor's to "junk" status. The US rating agency said mounting political turmoil and the difficulties faced by President Dilma Rousseff's government in tackling growing debt was behind the decision.

Brazil was awarded an investment-grade rating by S&P in April 2008, when the country's economy was on the rise. However, sliding commodity prices and austerity have created a recession. Ms Rousseff's left-wing government had imposed austerity measures in a bid to avoid such a downgrade.

S&P downgraded Brazil - Latin America's largest economy - sooner than had been expected. The move - a major setback for Finance Minister Joaquim Levy's attempts to shore up public finances - is likely to rock the Brazilian stock market on Thursday. S&P cut Brazil's rating from BBB-minus to BB-plus, which denotes substantial credit risk.

The outlook on the new rating remains negative, which means further downgrades could soon follow....

ANALYSIS FOLLOWS AT LINK