STOCK MARKET WATCH -- Thursday, 7 January 2016

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Thursday, 7 January 2016[font color=black][/font]

SMW for 6 January 2016

AT THE CLOSING BELL ON 6 January 2016
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Dow Jones 16,906.51 -252.15 (-1.47%)
S&P 500 1,990.26 -26.45 (-1.31%)
Nasdaq 4,835.77 -55.67 (-1.14%)


[font color=green]10 Year 2.17% -0.02 (-0.91%)
30 Year 2.94% -0.02 (-0.68%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]

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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 - Economic Blogs:[/font][/font]
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The Big Picture
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Brad DeLong
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goldmansachs666
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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.
09/21/15 Volkswagen CEO Martin Winterkorn apologizes for VW cheating on air quality standards with emission testing avoidance device. Stock drops 20%, fines may total $18B.
09/22/15 Stewart Parnell, CEO Peanut Corp. of America, sentenced to 28 years in prison for selling salmonella-tainted peanut butter that killed nine.
12/17/15 Martin Shkreli, former CEO Turing Pharmaceuticals and notorious price gouger, arrested on securities fraud charges. Posted $5M bail, resigned as CEO.




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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]

[Proserpina]

1. In this Dismal Economy, There’s One Thing that’s Booming! by Wolf Richter

http://wolfstreet.com/2016/01/05/in-this-dismal-us-economy-theres-one-thing-thats-totally-booming-craft-breweries/

Wolf –

I would feel a lot better about the world economy if I heard one positive thing from anyone other than “US consumers are continuing to spend” (until they can’t any more) and US folks are buying cars (on a trillion dollars of borrowed money). Does anyone have anything positive to say about the world economy other than it’s not as bad as we thought it might be?

Here’s my answer for Curious Cat: There is “one positive thing” in this economy – more than one, actually, but one sticks out. It’s a huge boom with a delicious product. It’s a true American success story, pushed forward not by central banks, governments, or misbegotten stimulus programs, but by scrappy upstarts that fought all odds and disrupted a tired oligopolistic industry. And now, after a few decades, they’re attracting mega-tons of money: craft brewers.

The Brewers Association reported that the total number of breweries in the US soared to 4,144 in 2015 – a phenomenal 36% jump from a year earlier. Since 2011, the number of breweries has skyrocketed 252%.

So it’s only a tiny slice of the US economy, but it comes at the expense of an oligopoly of multinational brewing conglomerates that have totally forgotten about their customers – which makes the story quintessentially American.

story at link

[Proserpina]

2. Raise a glass to that!

[Punx]

18. I'll raise a glass to that as well

Long been a fan of the craft brewing industry. Wish I had gotten into the business back in the early 80’s here in Portland when it was young. I have neighbors who are making a decent living brewing locally.

There is also a thriving micro distilling movement here in Oregon including an award winning distiller a few miles from my home.

And not on the radar yet, but the cannabis industry in Oregon, Washington and Colorado is growing. Fed banking regs and Schedule I probably holding things up.

[antigop]

21. Grand Hotel: "Let's Raise a Glass Together"

[Proserpina]

3. Wall Street Journal Says $19,000 a Year Is Adequate Middle-Class Retirement Income By Dean Baker

http://www.alternet.org/economy/wall-street-journal-says-19000-year-adequate-middle-class-retirement-income?akid=13855.227380.NJXEG2&rd=1&src=newsletter1048519&t=9

The right-wing war on Social Security increases...

While economic debates can often get into complex questions of theory or statistical methods, many hang on more simple issues, like the right adjective. We got a great example of one such debate in a Wall Street journal column by Andrew Biggs, an economist at the American Enterprise Institute and former Deputy Commissioner of the Social Security Administration under President George W. Bush.

Biggs looks at some recent evidence, most notably a new study from the Congressional Budget Office (CBO), and dismisses the idea that there is a retirement crisis. At the center of this assertion is the CBO projection that a typical household in the middle quintile, born in 1960, can expect to get $19,000 a year from Social Security. Biggs sees this $19,000 as replacing 56 percent of pre-retirement income and says this is not far from the 70-80 percent usually viewed as adequate. He then touts data on total retirement savings and pronounces everything as okay.

If we step back from replacement rates, we can ask a rhetorical question, is $19,000 a year a middle class income? Odds are that most people would not consider $19,000 a reasonable income for a middle class household, hence the basis for the claim about a retirement crisis. Biggs does point to the record amount of retirement savings. This is indeed good news for those who have these savings, but unfortunately most middle class households don't fall into this category.

According to the Federal Reserve Board's 2013 Survey of Consumer Finance, the average net worth outside of housing equity for the middle quintile of households between the ages of 55 and 64 was less than $55,000. This includes all IRAs, 401(k)s and other retirement accounts. This will translate into roughly $3,000 a year in additional retirement income, bringing this middle income household's income up to $22,000 a year. Biggs looks at this and says everything is just fine and we should be looking to cut Social Security. Those raising concerns about a retirement crisis do not see $22,000 a year as a middle class income. We are just arguing about adjectives here, there is not much disagreement on the situation.



Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). His most recent book is Plunder and Blunder: The Rise and Fall of the Bubble Economy. He also has a blog, Beat the Press.

[Punx]

20. Of Course they would

For the Sociopathic owners of the WSJ, 19k is a rounding error. I love (NOT!) how they like to tell the poor how good they have it.

What they forget about is that Medicare doesn't cover all your medical expenses in this country. You have to buy a supplemental policy and you still end up with co-pays.

And it will vary by state, but a decent one bedroom apartment will rent for about $800-900/month around here. So there's 10k of your 19k before we start on medical care, food, heat, or anything else.

And say you are fortunate enough to own your own home, taxes and maintenance will take a big chunk out as well.

[Proserpina]

4. MAULDIN: The Fed will be back at the zero bound

http://www.businessinsider.com/mauldin-fed-will-be-back-at-zero-bound-2015-12

John Mauldin, Mauldin Economics


Zero-percent interest rates have distorted the economy and the financial markets in countless ways. A fixed-income market in which the only fixed element is an interest rate fixed at zero is not something that would arise naturally. It exists only because someone twisted nature into a new shape. And as we all know, it’s not nice to fool with Mother Nature. She always takes her revenge.

The Old Days of Risk-Free Returns

There was a world back in the day where 5% was the minimum return you’d expect from any manager worth his salt. And any manager who only delivered 3% would have to polish his résumé. I hear you asking, what is this 5% return you speak of? Believe it or not, Treasury bills really yielded 5% as recently as 2006—right before the Fed began the easing cycle that ended this week. Everyone, myself included, thought that was perfectly normal. Returns in that range or even much higher had been our experience for 50 years, other than a brief stay just below 1% in the early-2000s recession. T-bills had always given us a nicely positive yield. No one imagined any other possibility.

The Consequences of “Cheap Money”

A risk-free return is pure fantasy now. We just finished seven years in which achieving returns with a + sign required taking on risk. We’ve been able to choose our poison: we could take credit risk, inflation risk, equity risk, hedge fund risk, hurricane risk (seriously, you can)—any risk we liked. The one thing we weren’t allowed to have was daily liquidity with returns above zero as a certainty. It was the Age of the Guessing Game. The ways in which the Fed has changed investor behavior are legion. By creating an environment that forced everyone to take risks, Ben Bernanke moved liabilities (i.e., deposits) out of the banking system and into risk assets. This helped the banks rebuild their mortgage-laden balance sheets.

Quite naturally, the price of risk assets rose as everyone piled into them. Stocks were only one example. Look at housing, most natural resources, and assets all over the emerging-market world. They rose nicely while ZIRP reigned, setting up the crash of the past year and making the markets less stable.


The World's Economy Is Too Fragile for the Fed's Projections

Although Fed governors project about 100 basis points of interest-rate hikes in the coming year, the market foresees only two hikes of 25 basis points. I’ll go with the market. The Federal Reserve economists' and board members’ projections assume no recession through 2019. If history has anything to say, they will be wrong. And while my opinion carries nothing like the weight of history, I personally think they will be wrong, too. We have already had the third longest “recovery” (weak as it is) following a recession since World War II. To think we can go without a recession for another full two years, through 2017, strains credibility. We will need to get well into 2018 or 2019 before we see the Fed’s projected funds rate of 3.5%.

I will repeat my wager from earlier this week: I think the chances that we’ll see 0% interest rates before we see 2% interest rates are better than 50-50. And I will give odds that we don’t see 3% before we are back to 0%.

more

[Proserpina]

5. 10 Powerful Reasons Why Bernie Scares Wall Street

http://www.alternet.org/election-2016/10-powerful-reasons-why-bernie-scares-wall-street?akid=13853.227380.Qm40Z1&rd=1&src=newsletter1048485&t=3

Bernie Sanders has declared war on the biggest players in Wall Street’s financial sector, saying they are overrun with “greed, fraud, dishonesty and arrogance,” and criticizing his top rival for the Democratic nomination, Hillary Clinton, as being naïve about what needs to happen to create a financial system that “works for all Americans.”

“To those on Wall Street who may be listening today, let me be very clear,” Sanders said in a midtown Manhattan speech on Tuesday. “Greed is not good. In fact, the greed of Wall Street and corporate America is destroying the fabric of our nation. And here is a New Year’s resolution that I will keep if elected president: If you do not end your greed, we will end it for you.”

Sanders laid out a 10-point program to deeply change the nature of the financial sector, while occasionally digressing to emphasize how much more sweeping his proposals are compared to Clinton's. As always, he started by recounting how the “20 richest people own more wealth than the bottom 150 million Americans”—and said the finance industry has spent “billions” to get Congress and federal agencies to deregulate almost all areas of the financial industry while weakening consumer protection laws.

“They spent this money in order to get the government off their backs and to show the American people what they could do with that new-won freedom,” he said. “They sure showed the American people. In 2008, the greed, recklessness and illegal behavior on Wall Street nearly destroyed the U.S. and global economy. Millions of Americans lost their jobs, their homes and their life savings.” Sanders continued, “While Wall Street received the largest taxpayer bailout in the history of the world with no strings attached, the American middle class continues to disappear, poverty is increasing and the gap between the very rich and everyone else is growing wider and wider.”

Here are the 10 major components to Sanders’ Wall Street reforms:

1. End too-big-to-fail.
2. Break up the biggest banks.
3. Pass a 21st-century Glass-Steagall Act.
4. End too-big-to-jail.
5. Criminalize Wall Street’s business model.
6. Tax the casino culture.
7. Reform the financial rating agencies.
8. Cap credit card interest and ATM fees.
9. Let the USPS offer banking.
10. Reform the Federal Reserve.


details and more at link

[Proserpina]

6. ECB raises bar for banks' payouts if capital is low

http://www.reuters.com/article/idUSL8N14P15A20160105

The European Central Bank is raising the bar on how much a bank can pay out in bonuses, dividends and coupons if its capital level falls below the regulatory minimum, it said on Tuesday.

Euro zone bank managers and investors had been left scratching their heads after EU rules failed to specify whether banks should take into account capital requirements set by national supervisors, known as Pillar 2, when they calculate their maximum distributable amount (MDA). The MDA determines how much a bank can pay out in bonuses, dividends and coupons on certain debt instruments if its capital level is below their combined buffer requirement.

The ECB's supervisory arm, which had so far been quiet on the matter, said on Tuesday it would follow the opinion of the European Banking Association, which said last month Pillar 2 requirements should be part of the MDA calculation. "For the application of maximum distributable amounts (MDAs), the SSM approach refers to the opinion published by the EBA," the ECB's Single Supervisory Mechanism said in a document published on its website on Tuesday.

The EBA's opinion, which is in line with that of the Bank of England, was likely to lead European national supervisors to harmonise their stances, which have so far differed across the region.

[Proserpina]

7. Another Slow Year for the Global Economy

http://www.nakedcapitalism.com/2016/01/another-slow-year-for-the-global-economy.html

Yves here. The regular sightings of the confidence fairy in November and December have been followed by a spell of unusual sobriety, at least among economists.

By Ashoka Mody, Professor of Economics at Princeton. Originally published at Project Syndicate: http://bruegel.org/2016/01/another-slow-year-for-the-global-economy/

Last April, the International Monetary Fund projected that the world economy would grow by 3.5% in 2015. In the ensuing months, that forecast was steadily whittled down, reaching 3.1% in October. But the IMF continues to insist – as it has, with almost banal predictability, for the last seven years – that next year will be better. But it is almost certainly wrong yet again. For starters, world trade is growing at an anemic annual rate of 2%, compared to 8% from 2003 to 2007. Whereas trade growth during those heady years far exceeded that of world GDP, which averaged 4.5%, lately, trade and GDP growth rates have been about the same. Even if GDP growth outstrips growth in trade this year, it will likely amount to no more than 2.7%.

The question is why. According to Christina and David Romer of the University of California, Berkeley, the aftershocks of modern financial crises – that is, since World War II – fade after 2-3 years. The Harvard economists Carmen Reinhart and Kenneth Rogoff say that it takes five years for a country to dig itself out of a financial crisis. And, indeed, the financial dislocations of 2007-2008 have largely receded. So what accounts for the sluggish economic recovery?

One popular explanation lies in the fuzzy notion of “secular stagnation”: long-term depressed demand for goods and services is undermining incentives to invest and hire. But demand would remain weak only if people lacked confidence in the future. The only logical explanation for this enduring lack of confidence, as Northwestern University’s Robert Gordon has painstakingly documented and argued, is slow productivity growth. Before the crisis – and especially from 2003 to 2007 – slow productivity growth was being obscured by an illusory sense of prosperity in much of the world. In some countries – notably, the United States, Spain, and Ireland – rising real-estate prices, speculative construction, and financial risk-taking were mutually reinforcing. At the same time, countries were amplifying one another’s growth through trade.

Central to the global boom was China, the rising giant that flooded the world with cheap exports, putting a lid on global inflation. Equally important, China imported a huge volume of commodities, thereby bolstering many African and Latin American economies, and purchased German cars and machines, enabling Europe’s largest economy to keep its regional supply chains humming. This dynamic reversed around March 2008, when the US rescued its fifth-largest investment bank, Bear Sterns, from collapse. With the eurozone banks also deeply implicated in the subprime mortgage mess and desperately short of US dollars, America and much of Europe began a remorseless slide into recession. Whereas in the boom years, world trade had spread the bounty, it was now spreading the malaise. As each country’s GDP growth slowed, so did its imports, causing its trading partners’ growth to slow as well...The US economy began to emerge from its recession in the second half of 2009, thanks largely to aggressive monetary policy and steps to stabilize the financial system. Eurozone policymakers, by contrast, rejected monetary stimulus and implemented fiscal austerity measures, while ignoring the deepening distress of their banks. The eurozone thus pushed the world into a second global recession. Just when that recession seemed to have run its course, emerging economies began to unravel. For years, observers had been touting the governance and growth-enhancing reforms that these countries’ leaders had supposedly introduced. In October 2012, the IMF celebrated emerging economies’ “resilience.” As if on cue, that facade began to crumble, revealing an inconvenient truth: factors like high commodity prices and massive capital inflows had been concealing serious economic weaknesses, while legitimizing a culture of garish inequality and rampant corruption. These problems are now being compounded by the growth slowdown in China, the fulcrum of global trade. And the worst is yet to come. China’s huge industrial overcapacity and property glut needs to be wound down; the hubris driving its global acquisitions must be reined in; and its corruption networks have to be dismantled.

In short, the factors that dragged down the global economy in 2015 will persist – and in some cases even intensify – in the new year...


the Naked Capitalism comments are brutal

[Proserpina]

8. Deflation Denialism: No, Chancellor, 0.5% Inflation is Not “Welcome News”

http://www.nakedcapitalism.com/2016/01/deflation-denialism-no-chancellor-0-5-inflation-is-not-welcome-news.html

By Ann Pettifor, a Director of Policy Research in Macroeconomics (PRIME), Honorary Research Fellow at the Political Economy Research Centre at City University (CITYPERC) and a fellow of the New Economics Foundation, London. Originally published at PRIME Economics: http://www.primeeconomics.org/articles/no-chancellor-05-inflation-is-not-welcome-news

What is deflation? What has caused inflation to fall? And why is there no such thing as ‘good deflation’?

Introduction

On Monday the Office of National Statistics (ONS) announced that inflation at 0.5% was lower than the 1% rise that had been predicted by the Bank of England as recently as November. And it was lower than the prediction of most economists who believed prices would rise by to 0.7%. We at PRIME are not surprised, as we have tracked Britain’s disinflation (falling prices) for some time. And we warned as far back as 2003, and again in 2006, 2010, and e.g. in October, 2014 of the threat of global debt-deflation. Because policy-makers lack the tools to correct a deflationary spiral, the prospect of deflation is frightening.

We therefore find ourselves at odds with the British Chancellor, George Osborne who announced that the fall in inflation to 0.5% was “welcome news”; with the Bundesbank President, Jens Weidmann, who argued recently that “an inflation rate that for a few months lies below zero, for me, doesn’t represent deflation”; and finally with the Financial Times which ran the following headline on the news of Britain’s low inflation rate: ‘Good deflation’ seen as spur to growth”. (Note: this headline appeared in the paper edition of 14 January, 2015, and not in the digital edition.)

[bFor ordinary consumers, workers, farmers and for the owners of firms and shops – especially those with debts – there is no such thing as “good deflation”.

What is Deflation?

Deflation occurs when prices (not necessarily all prices, but the average price level) fall below the costs of production – i.e. when prices become negative. So in a deflationary environment producers will sell a good or service at below the level of profitability or below the cost of making that product. They will do this just simply to get products off the shelves and out of the warehouse – before prices fall even further. Deflating prices may appeal to the consumer, and may boost consumption in the short-term, but they are associated with savage costs that will quickly catch up with British and European, and potentially even American consumers.

The reason is as follows: if producers or retailers sell their wares below cost, then they will invariably make a loss on those sales. Their business will become less profitable. The sensible response when a firm is not able to price its goods to make a profit, or to cover costs, is to produce less of what it is unprofitable. In other words: to shrink productive activity. This is done by cutting production, trimming wages and inevitably, laying off staff. Thus the fall in prices, leads to a fall in profits, which leads to falls in wages and to a rise in unemployment. Unemployment means that workers lack disposable income, and find it harder to buy products and services on offer. As a result producers sell even fewer of their already low- priced products or services. Bankruptcies and unemployment rise, while wages and prices fall further, and so the deflationary spiral takes hold...Furthermore, the price indices managed by government –in particular the Consumer Price Index (CPI – are used to fix wages in private and public sector wage negotiations. Benefits received by disabled people and pensioners increase (or decrease) in line with CPI inflation. So when the CPI falls, be sure wages and benefits will fall too...

For Whom is Deflation Good?

Deflation is good for those on fixed incomes, as these will rise in real terms as prices fall.

Deflation is good for creditors/money-lenders or the rentier class. This is because while prices can fall below zero, interest rates cannot. So while wages or incomes may fall below zero, interest rates (at what is known as the ‘zero-bound’) will rise relative to these falls. If prices fall below zero, say to minus 2% but the interest rate remains at plus 2%, then the real rate of interest rises to 4% in a deflationary environment. And while prices, wages and incomes can fall below zero, debts remain fixed, and in relation to falling wages and incomes – rise in value. This is why creditors encourage, and even pressure politicians and policy-makers (central bankers and officials) to apply deflationary policies – because deflationary policies protect and even increase the value of their most important asset – debt.

To repeat: whereas inflation erodes the value of debt, deflation increases the real value of debt. So in a deflationary environment, creditors (effortlessly) grow richer as the value of debts owed to them rises (until their debtors default); and debtors with falling incomes find their debts become unpayable.

much more economic analysis of UK present state at links

[Proserpina]

9. Last year, President Obama was the number one weapons dealer in the world

http://rare.us/story/last-year-america-was-the-worlds-biggest-arms-dealer/

...the United States is number one in plenty of global categories. Unfortunately, one of those is weapons sold to other countries—and there’s very little competition. The New York Times reports:

Foreign arms sales by the United States jumped by almost $10 billion in 2014, about 35 percent, even as the global weapons market remained flat and competition among suppliers increased, a new congressional study has found.

American weapons receipts rose to $36.2 billion in 2014 from $26.7 billion the year before, bolstered by multibillion-dollar agreements with Qatar, Saudi Arabia and South Korea. Those deals and others ensured that the United States remained the single largest provider of arms around the world last year, controlling just over 50 percent of the market.

The luckiest recipient of our ordnance largesse was South Korea, which is looking to beef up its military capacity after increased aggression from the north. But note those other clients: Saudi Arabia and Qatar. These are our purported allies, but recently they’ve acted against our interests, deserting the fight against the Islamic State to blow apart Yemen and arming Syrian rebels groups that include unabashed Salafists. They’re also some of the biggest supporters of terrorism in the world, with extreme Wahhabist Islam integrated into the Saudi government and Gulf donors funneling money to everyone from the Islamic State to al-Qaeda.

Yet the weapons continue to flow.

This is par for the course. Over the past 60 years, Saudi Arabia has built one of the most lethal militaries in the Middle East thanks to the generosity of the United States. The Kingdom struck $80 billion in arms deals with Washington between 1950 and 2006, and an additional $90.4 billion has been approved since 2010 under the purview of our Nobel Peace Prize-winning, gun control-loving president. The Obama administration has also announced that it will begin selling drones to our Gulf allies. Today, Saudi Arabia is the biggest arms importer in the world, and many of those weapons come from American vendors.

It’s also an archaic monarchy with no conception of democracy and an abysmal human rights record. That shouldn’t rule it out for American friendship—sometimes we need to work with unsavory characters—but its aforementioned record of poking us in the eyes should. How difficult would it be to impose prohibitions on arms sales to the Gulf states until they crack down on terrorism and rejoin the fight against the Islamic State? We’d need to corral other nations that deal with the Saudis, particularly France, but if we can enforce sanctions on the Iranian economy then why can’t we limit weapons sales to Saudi Arabia?

One final question. As the New York Times points out, the United States is responsible for half of the global weapons market. As al-Nusra steals our equipment in Syria and ISIS drives our Humvees around Iraq, is the dubious honor of “#1 arms dealer” really something we want?

[MattSh]

10. Conversations with a 4 year old - a humor break

Conversations with a 4 year old

So, we had a family get together for Orthodox Christmas last evening. Not because any of us are particularly religious; just because it's a reason to get together.

So our cousins son, 4 years old, wanted to say the first toast. But he was a bit confused as to why everybody was here. So the questions started.

As my wife translated the conversation for me. It was in Russian, so it may lose something in the translation.

Q. Who's birthday is it?
A. Nobodys

Q. Why is everybody here?
A. Tomorrow is Christmas. (Remember the big gift giving day here is New Years Day; Christmas is just a religious holiday)

Q. What is this Christmas?
A. It's God's Birthday

Q. Who is God?
A. God lives up there (pointing up)

Q. Is he a dragon?
A. No

Q. Is he an airplane?
A. No

Q. What is his name?
A. Jesus Christ

Hmm. Not somebody we know.

[Proserpina]

11. Macy's To Cut 4,800 Jobs After Dismal Holiday Sales (so much for Xmas)

http://www.npr.org/2016/01/07/462223321/macys-to-cut-4-800-jobs-after-dismal-holiday-sales?utm_medium=RSS&utm_campaign=news

Macy's is slashing jobs, a harbinger of hard times for retailers after a holiday season that saw a noticeable shift to online shopping and away from physical stores. The nation's largest department store chain, which also operates Bloomingdale's, said late Wednesday it is cutting up to 4,800 jobs and trimming its profit outlook after a miserable holiday season.

"I think Macy's is likely to be a canary in a coal mine," said Ken Perkins, president of Retail Metrics, a retail research firm. He said retailers witnessed an acceleration of the shift toward online and mobile holiday spending in 2015.

About 2,110 of the job cuts at Macy's will come from reducing staffing at stores, eliminating duplications in back-office operations and consolidating regional store groups. The remaining 2,710 job cuts will come from the store closings that Macy's announced last fall, spokesman Jim Sluzewski said. As of Wednesday, Macy's had about 163,000 workers.

The moves are part of Macy's ongoing campaign to position itself to compete in a retail world where increasingly demanding shoppers are going back and forth between stores and their mobile devices. Analysts expect more retailers to announce they're shrinking their store counts further and making other moves to make their organizations leaner. With store traffic down, stores had to discount more. Mother Nature also hurt holiday sales too, particularly at clothing stores. Unseasonably warm weather in some regions in the U.S. squelched shoppers' demand for cold-weather goods. Perkins expects fourth-quarter earnings to increase a meager 0.3 percent for the 119 retailers he tracks, compared with a 12.5 percent increase a year ago. Macy's, which has corporate offices in Cincinnati and New York, says sales at existing stores and excluding licensed departments fell 5.2 percent in November and December. It said that the warm weather was the biggest culprit. That forced Macy's to step up discounts to clear out mounds of merchandise. Business was also hurt by lower spending by international tourists. But, like other retailers, Macy's is also contending with broader changes in spending habits...


The company also listed Wednesday which 40 Macy's stores it would close or had closed. It had announced plans to close stores in September. Of the 40, 36 will close in early spring. The other four closed last year. Before the closures, the company had 770 stores under the Macy's name in the U.S. Macy's said Wednesday that it now expects its profit for its fiscal fourth quarter and full year, which run through January, to fall short of its previous estimate. The company's shares rose more than 3 percent to $37.40 in extended trading Wednesday, after falling more than 2 percent to $36.15 in regular trading. Macy's shares have lost more than 44 percent in the last 12 months.

[Fuddnik]

16. They got busted on the news last night for running a scam.

The feds accused them of running the time-honored fake sale scam on its customers.

Secretly raise prices enormously, then slash prices back down to where they were, and then claim a huge price reduction sale.

I've been in a Macy's once, about 5 or 6 years ago, around xmas, and they tried pulling a bait and switch on me. Never went back in a second time. You can buy anything they have, cheaper every day, around the corner.

[Proserpina]

12. Who loses from punishing Russia? (the UK, for one) from October 2014

http://www.bbc.com/news/business-26431849

If trade and financial sanctions were imposed on Russia, the cost to the UK might well exceed the cost to Russia...

and as we have seen, it's done no favors for the EU, either.

[Fuddnik]

17. I'm sure it does wonders for Miss Vickie, and her neocon partners.

[Proserpina]

13. Can money buy happiness?

http://www.theguardian.com/money/2016/jan/07/can-money-buy-happiness

...

One survey of 1,000 Americans, conducted in 2010, concluded that money does make us happier – but only up to a certain point. The findings, by psychologist Daniel Kahneman and economist Angus Deaton, both from Princeton University, showed that self-reported levels of wellbeing increased with salary up to $75,000 (roughly £50,000) a year. But after that, increasing amounts of money had no further effect on happiness.

However, a more recent study, published by researchers at the University of Michigan in 2013, challenged the idea that the positive effect of money plateaus. After comparing life satisfaction and happiness levels in both rich and poor countries, and rich and poor people within a country – with “rich” being defined as an income greater than $15,000 (roughly £10,000) per person – Betsey Stevenson and Justin Wolfers concluded: “The relationship between wellbeing and income … does not diminish as income rises. If there is a satiation point, we are yet to reach it.”

This would strike a chord with actor Bo Derek, who once claimed: “Whoever said money can’t buy happiness simply didn’t know where to go shopping.”

$15k is considered "rich"? What pikers are these? $15k won't even permit saving!

[Proserpina]

14. Looks like China's stock market did it again

hold onto your hats, everybody!

[Hotler]

15. Soros: It's the 2008 crisis all over again

Billionaire investor George Soros has warned investors of an impending financial markets crisis as investors around the world were roiled by turmoil in China trade for the second time this week.

Speaking an economic forum in Sri Lanka's capital Colombo, he told an audience that China is struggling to find a new growth model and its currency devaluation is transferring problems to the rest of the world, according to media. He added that a return to rising interest rates was proving difficult for the developing world.

"It should be noted that the current turmoil distinguishes itself from 2008, when reckless lending, willful blindness to a mountain of credit sector risks and feckless and irresponsible regulation and supervision of markets were the causes of the crash, given that central bank policies have been encouraged and been wholly responsible for the current protracted bout of gross capital misallocation," he said in a morning note.

http://www.msn.com/en-us/money/markets/soros-its-the-2008-crisis-all-over-again/ar-AAgtdAx?li=BBnb7Kv&ocid=iehp

[Fuddnik]

19. Dow -328 at 1:30pm.

[DemReadingDU]

23. Bloodbath

[Proserpina]

22. Heat Wave in Michigan! 43F!

and to think it was 10F Tuesday morning. No wonder we are feeling manic-depressive.

I had to take my coat off!


In honor of the craziness, I'll be running a series of Weekends with massively awful puns. So you have been warned. If you can't stand it, don't read the title/post. Otherwise, I hope you can groan, if not crack a wry and sorrowful grin.